EUR 120.00 For Business Accounts Only

MOSL: MOrning India (28/August/19): 1. Page Industries (Long-term investment case intact); 2. HDFC Standard Life Ins.; 3. Petronet LNG; 4. S H Kelkar & Co; 5. Retail; 6. Telecom

MOrning India (28/August/19): 1. Page Industries (Long-term investment case intact); 2. HDFC Standard Life Ins.; 3. Petronet LNG; 4. S H Kelkar & Co; 5. Retail; 6. Telecom

 

Today’s top research idea

Page Industries (Annual Report): Long-term investment case intact; Near-term uncertainty remains high

Key highlights from Page Industries' annual report

• FY19 turned out to be a tough year for PAG; performance was dragged by lower volume growth (+5.6%) and muted growth of 3%/5.8% in its key segments of Men's/Women's innerwear. Sales/EBIDTA/Adj. PAT for FY19 grew 11.8%/14.1%/13.5%.
• The spurt in inventory towards FY19-end took the sheen off the remarkable improvement in inventory days in the 18 months ending Sep'18. However we note that after the 1QFY20 results recently, company indicated that inventory days were back to Mar'18 levels. Thus, while there is tremendous uncertainty in the near term (and perhaps, medium-term earnings growth as well), the balance sheet improvement appears to be back on track.
• PAG remains an attractive investment case in the Indian consumer space. It has healthy long-term earnings growth prospects and sound ROEs (50.8% in FY19, considerably aided by sharp increase in dividend payout). Despite sharp correction from its peak, the stock is not cheap at 40.7x FY21EPS, Maintain Neutral.

Piping hot news

HUL reduces Lifebuoy, Lux prices in latest sign of weak demand

Hindustan Unilever Ltd (HUL) has cut prices of its Lux, Lifebuoy and Dove soaps in the past month, passing on the benefit of cheaper inputs, as India’s largest consumer goods company aims to win customers amid stiff competition and weak demand. “HUL does selective and judicious price changes across its portfolio in the normal course of its business. Given that the commodity prices are expected to remain benign for a certain time period, we have taken price reductions in the range of 4% to 6% in Lux and Lifebuoy portfolio, while it may be higher on certain packs in order to pass on the benefits to the consumers.