Shares of Page Industries Ltd are on a free-fall for the last six weeks as the stock has corrected nearly 15 per cent from its 52-week high. However, brokerage firms tracking the counter continue to remain mostly positive on the counter and believe that the stock is headed for new highs towards Rs 50,000 mark, which it has been unable to hit in the previous bull run.
The analysts believe that Page Industries delivered a strong operational performance in the December 2024 quarter, but the soft demand from the consumers remains subdued. However, modern retail and e-commerce continued impressive growth and the demand is likely to return following the government's measure to boost the consumption.
Page Industries Q3FY25 results missed the topline but the Ebitda margins improved by 435 bps to 23 per cent, fueled by cost efficiencies, strategic sourcing, healthier inventory management, and gross margin gains, said Axis Securities. However, short-term challenges like subdued demand and increased competitive intensity, are expected to constrain volume growth, it said.
"We appreciate the management's unwavering focus on expanding distribution through multiple channels and smaller cities, along with their consistent commitment to implementing ARS across the retail network. This strategy will likely make Page Industries more flexible and resilient than its competitors in the long run," it added with a 'hold' rating with a target price of Rs 42,700.
Page Industries reported a 34.3 per cent rise on a year-on-year (YoY) basis in its net profit at Rs 204.7 crore, with revenue rising 7.1 per cent YoY on year to Rs 1,313 crore in the December 2024 quarter. The makers and distributors of Jockey brand in India clocked an Ebitda of 302 crore, up 33.6 per cent YoY as Ebitda margins expanded by 435bps YoY to 23 per cent, driven by improved gross margins and cost optimisation.
Page Industries sustained robust post-pandemic sales despite rising competition, posting a revenue CAGR of 9.9 per cent in FY19-24, said Elara Capital. "We expect a revenue CAGR of 11.6 per cent and a PAT CAGR of 17.7 per cent in FY24-27E, higher than the past five-years’ CAGR. We expect PAT CAGR to be led by raw material tailwinds and premiumization," it said.
Elara believes that gross margin benefit will continue for the next 2-3 quarters due to subdued cotton prices. Adjusting for a slight cut in sales growth and increase in other income, it raised earnings estimates by 2.9 per cent for FY25E while maintaining FY26E/27E earnings estimates. Elara has an 'accumulate' rating on Page Industries with a target price of Rs 52,268 per share.
Shares of Page Industries dropped more than 2 per cent to Rs 43,045 on Friday, with its total market capitalization standing little more than Rs 48,250 crore. The scrip had settled at Rs 43,986.95 in the previous trading session. The stock has corrected nearly 15 per cent from its 52-week high at Rs 49,933.15 hit in December 2024. The stock has more than doubled investors' wealth in the last 5 years.
Page Industries reported revenue for Q3FY25 was in-line while operating and net profit was higher than estimates. In Q3FY25 revenue increased was led by a volume growth of 4.7 per cent YoY, in-line with estimates, said SMIFS. The management highlighted that while festivities in the beginning of the quarter propelled demand but was not sustained subsequently, it said.
"It reported strong operating margin performance with a focus on operational efficiencies, cost control, strategic sourcing initiatives, increased contribution from premium products and a stable raw material cost. The operating environment in Q3FY25 continued to be affected by subdued demand conditions," SMIFS added with an 'accumulate rating and a target price of Rs 49,050.
The company will reassess pricing for FY26 as part of its ongoing budgeting process as there has been no price increase over the past three years. The company board of Page Industries also declared its third interim dividend for FY25 at Rs 150 per share, for which the record date has been fixed at February 13, to be paid by March 7, it said in the exchange filing.
Among the overseas brokerage firms, Morgan Stanley has maintained its 'overweight' stance on the Page Industries with a target price of Rs 44,500, while Macquarie remains 'underperform' on the company, attributing it a target price of Rs 36,000, suggesting another 16 per cent in the stock.