MOSL: PAGE INDS. (Buy)-Beat on all fronts-Maintain Buy

​Page Inds.: Beat on all fronts; Maintain Buy

(PAG IN, Mkt Cap USD2.5b, CMP INR14237, TP INR18000, 26% Upside, Buy)

• Page Industries' (PAG) 4QFY17 net sales grew 14.8% YoY to INR5.08b (est. INR4.84b), with 8.4% volumes growth. EBITDA grew 14.7% YoY to INR1.06b (est. of INR977m). Adj. PAT was up 17.8% YoY to INR668m (est. of INR637m).
  
• 4QFY17 volumes grew 8.4% YoY. Men's innerwear, women's innerwear and sportswear segments posted 17.0%, 12.1% and 14.2% YoY growth, with volumes up 10.5%, 7.9% and 4.8% YoY, respectively. Performance was below expectations in Speedo, where sales fell 24.5% YoY (volumes down 21.3%).
  
• Gross margin expanded 170bp YoY to 65.2% (est. of 59.1%). This was offset by higher employee cost (+90bp YoY) and other expenses (+80bp YoY), resulting in flat EBITDA margin YoY at 20.9%.
  
• FY17 performance: Sales rose 19.2% YoY to INR21.5b (13% volume growth). EBITDA grew by 12% YoY to INR4.22b and PAT by 15% YoY to INR2.66b.
  
• Management interaction takeaways: (1) Company took ~4% price hike in Jan, which was partially reflected in the quarter. (2) Yarn prices rose to INR217/kg (v/s INR203/kg last year), but the increase was not material v/s past quarter. Management does not expect yarn costs to go up much from here.