Page Industries extends fall after disappointing Q2 results

The stock slipped 7% to Rs 25,867 on Thursday, extending its 4% decline on the BSE on Wednesday

Shares of Page Industries have slipped 7% to Rs 25,867 per share on Thursday, extending their 4% decline on Wednesday on the BSE in an otherwise firm market after the company reported a disappointing set of numbers for the quarter ended September (Q2FY19).

With past two day’s decline, Page Industries fallen 29% from its all-time high level of Rs 36,336 touched on August 28, 2018, against a 10% decline in the S&P BSE Sensex.

The Indian franchise and manufacturer of Jockey innerwear reported a lower-than-expected net profit and revenues of Rs 926 million and Rs 6,908 million, respectively. Analysts on an average had expected a profit of Rs 1,140 million and revenue of Rs 7,450 million in Q2FY19.

Ebitda (earnings before interest, tax, depreciation and amortization) margin declined sequentially to 20.7% in Q2FY19 from 23.2% in Q1FY19 and 24.1% in Q4FY18.

The board of directors of the company declared a total dividend of Rs 151 per share, which include a special dividend of Rs 110 per share. The date fixed for payment of dividend is on or before December 06, 2018.

“After delivering nine straight quarters of strong performance, Page Industries exhibited deceleration in earnings growth, part of which can be attributed to the timing mismatch of the festive season in FY19 compared to the previous year,” Motilal Oswal Securities said in result update.

“Nevertheless, near-term valuations at 56.6x FY20E EPS leave little room for upside from a one-year perspective. Note that valuations are at premium levels, despite assuming a healthy 26% EPS CAGR over FY18-20. We, thus, believe that slower than- expected execution going forward can pose downside risks,” the brokerage firm added with ‘neutral’ rating on the stock.

“Page Industries’ reported a flat volume growth as the quarter witnessed unfavorable base due to shift in festive season. Consequently, the sales growth came below our estimate. Nevertheless, volume growth in Q3 is expected to recover completely driven by favorable working conditions for the company. Though operational performance during the quarter came below our estimate, we believe that recent price hikes and revamp in volume growth would help the margins to improve in the ensuing quarters,” analysts at Dolat Capital said with ‘buy’ rating on the stock.

At 02:12 PM; Page Industries was trading 6% lower at Rs 26,110 on the BSE, as compared to a 0.6% rise in the S&P BSE Sensex. A combined 67,917 equity shares changed hands on the counter on the BSE and NSE so far.