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MOSL: PAGE INDS. (Neutral)-Key takeaways from Page Industries’ (PAG) business update

Page Inds.: Key takeaways from Page Industries’ (PAG) business update

(PAG IN, Mkt Cap USD3.2b, CMP INR20128, TP INR19740, 2% Downside, Neutral)

•  Business opportunity: The knitwear market size is likely to grow at a promising rate of 9%, from INR689.3b now to INR1,617b over the next decade. Menswear is the single largest category in knitwear (accounting for 40%), followed by womens wear (34%), boys wear (18%) and girls wear (8%).
• FY19 performance: PAG suffered from subdued consumption due to the generally weaker market and footfalls. Jockey’s revenue grew 11.71% (mens: +10.85%; womens: +11.19 %, socks: +18.13% and kids wear: +56.6%), with volumes increasing 5.63% (3.02%, 5.84 %, 19.13% and 41.63% respectively). Segmental volume growth was not shared in the 4QFY19 results announcement and conference call.
• Update on Speedo: The Speedo brand has achieved a turnover of INR419.8m in FY19 v/s INR428.3m in the previous year. As on 31st Mar’19, this brand is available in 1,299 stores, including 42 EBOs and 46 large format stores spread across 155 cities.

Expansion and new investments

• Installed capacity spread across various units is over 2.40m sq. ft. at 14 locations in the state of Karnataka and one location in Tamil Nadu.
• To meet growing market demand and support aggressive growth plans, PAG is working toward doubling its installed capacity from the existing 260m pieces over the next five years.
• PAG has a greenfield project at Anantapur. APIIC has allotted 27 acres of land, on which, the company is setting up a manufacturing facility of 0.60 million sq. ft. built-up area to meet growing demand of mens business. Currently, the company is in the process of obtaining various approvals from the statutory authorities to commence the civil works and other locations near Mysore in Karnataka.
• Anantapur operations will commence in 4QFY21.
• A new unit at K.R. Pet near Mysore with 0.2m sq. ft. for manufacturing/raw material warehousing at a leased-out building will be functional from 2QFY20.