MOSL: PAGE INDUSTRIES (Buy)-Strong growth continues with operating margin expansion
Page Industries: Strong growth continues with operating margin expansion; Maintain Buy
(pag IN, Mkt Cap USD3.8b, CMP INR24465, TP INR28200, 15% Upside, Buy)
- PAGE’s net sales grew by a healthy 22.3% YoY to INR6.1b (est. of INR6b). Volume grew by 5.5% YoY in the quarter. Men’s Innerwear, women’s innerwear and sportswear segments grew by 17%, 23% and 30%, led by volume growth of -1%, 9% and 18%, respectively. Flat volumes in men’s innerwear (55% of total volumes) caused by temporary supply chain issues affected volumes for the quarter.
- Gross margin shrank 190bp YoY to 62.6%. This was offset by strong operating leverage, as employee costs (as % of sales) declined by 410bp YoY and other expenses declined by 230bp YoY, resulting in EBITDA margin expansion of 460bp YoY to 24.1%. Thus, EBITDA grew strongly by 50.8% (est. of +28% YoY) to INR1.5b. Adj. PAT grew by a healthy 41.1% YoY to INR942m (est. of INR786m).
- FY18 performance: Sales, EBITDA and adj. PAT grew 20%, 31% and 30%, respectively. EBITDA margin expanded 180bp YoY to 21.2%.
Page Industries is a garment manufacturing group based in India. Co. is the exclusive licensee of JOCKEY International for manufacture and distribution of the JOCKEY® brand Innerwear/Leisurewear for Men and Women in India, Sri Lanka, Bangladesh, Nepal and United Arab Emirates. Co. is also the exclusive licensee of Speedo International for the manufacture, marketing and distribution of the Speedo brand in India (products include swimwear, water shorts, apparel, equipment and footwear). Co. maintains manufacturing operations spread over 9 complexes in Bangalore and Hassan in addition to 25,000 plus retail outlets in 1,200 cities and towns across India.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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