Hold Page Industries, target price Rs 17,500: Emkay Global

Emkay Global has given a hold rating to Page Industries with a 12-month target price of Rs 17,500. The share price moved up by 6.76 per cent from its previous close of Rs 19177.00. The stock’s last traded price is Rs 20,473.

Page reported an 11 per cent fall in revenues (decline was 5 per cent above expectations), dragged by a loss in volumes (down ~19 per cent) due to non-fulfilment of orders and store closures. Covid-19 impacted revenues by around Rs 1.5 billion 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 work from home-led leisurewear purchases, closer proximity and strong brand recall. It expects a healthy balance sheet and strong supply chain to help gain the market share.

Investment Rationale

Factoring in the delayed reopening and gradual recovery from the second half, the brokerage has reduced its FY21/22E EPS by ~10 per cent. While Page seems to be benefitting from work from home-led demand for its products and share gains, the brokerage awaits better clarity on recovery trends. Despite the underperformance, valuations at 47 times FY22EPS are not attractive and the brokerage is waiting for a better entry point. It maintains a hold rating with a revised target price of Rs 17,500 (from Rs 18,200) based on 40 times Jun-22 EPS.



Financials

For the quarter ended March 31, 2020, the company reported standalone sales of Rs 541.26 crore, down -31.81 per cent from last quarter sales of Rs 793.80 crore and down -10.96 per cent from last year's same quarter sales of Rs 607.86 crore. The company reported net profit after tax of Rs 31.02 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 48.31 per cent stake in the company as of March 31, 2020, while FIIs held 29.17 per cent, DIIs 10.31 per cent and public and other 12.21 per cent.