EUR 120.00 For Business Accounts Only

MOSL: PAGE INDUSTRIES (Neutral)-Annual Report- Long-term investment case intact; Near-term uncertainty remains high

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

(PAG IN, Mkt Cap USD2.8b, CMP INR18256, TP INR19110, 5% Upside, Neutral)

 

We pored over Page Industries (PAG’s) FY19 annual report; key insights highlighted below:

 

In midst of a slowdown, but long-term runway still intact

• 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%. We believe the year under review was impacted by subdued consumption, trade liquidity issues and competition.
• Management is targeting 20% topline growth (led by 10% volume growth) for FY20. But, we believe this target is difficult to achieve, particularly as trade liquidity concerns have persisted for the first few months in FY20. However, we believe the long-term growth prospects remain healthy.
• The Indian innerwear market is expected to grow at 10% CAGR over 2017-27 while Men’s/Women’s innerwear is estimated to grow 6%/12%. Newer segments, mainly Athleisure and Kid’s innerwear, are expected to grow even faster.