Hold Page Industries; target of Rs 17,500: Emkay Global Financial

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Emkay Global Financial's report on Page Industries

Page reported an 11% fall in revenues (decline was 5% above expectations), dragged by a loss in volumes (down ~19%) due to non-fulfilment of orders and store closures. Covid-19 impacted revenues by ~Rs1.5bn in Q4FY20. Commentary was encouraging, with sales surpassing expectations and pre-Covid-19 levels in some of the open stores. Page attributed the strong demand to WFH-led leisure-wear purchases, closer proximity and strong brand recall. It expects healthy balance sheet and strong supply chain to help gain the market share. Comparable EBITDA margins disappointed and fell by ~1,100bps YoY in Q4 on account of loss of sales in Mar’20. It expects a freeze on employee hiring, IT investments and other cost optimizations to help margins in FY21E.

Outlook

Factoring in the delayed reopening, we reduce our FY21/22E EPS by ~10%. Valuations at 47x FY22EPS are not attractive yet and we await a better entry point. We maintain Hold, with a revised TP of RS17,500 (from Rs18,200) based on 40x Jun-22 EPS.

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