Page Industries surges 6%, hits over two-year high

In anticipation of growing demand post the pandemic, the company said it will continue to invest in increasing its installed capacity

Shares of Page Industries rose 6 per cent in intra-day trade on Monday to hit a two-year high of Rs 33,093 on the BSE amid hopes of an improved demand environment post the Covid-19 pandemic. The stock surpassed its previous high of Rs 32,450 touched on May 27, 2021. Currently, it was trading at its highest level since October 2018. It had hit a record all-time high of Rs 36,336 on August 28, 2018.

Page Industries is engaged in the manufacturing, distribution and marketing of innerwear, athleisure, sleepwear and swimwear for men, women and kids. The company is the exclusive licensee of Jockey International Inc. (USA) for the manufacture, distribution and marketing of the JOCKEY brand in India, Sri Lanka, Bangladesh, Nepal, UAE, Oman and Qatar.

Page Industries is also the exclusive licensee of Speedo International Ltd. for the manufacture marketing and distribution of the Speedo brand in India consisting of swimwear apparel water shorts equipments and footwear. JOCKEY is the company's flagship brand and a market leader in the innerwear category.

"In anticipation of growing demand post the pandemic, the company will continue to invest in increasing its installed capacity. With the ongoing addition of new buildings, infrastructure and facilities, the installed capacity is scalable and can be ramped up with incremental machinery and manpower to meet the expected healthy growth in demand," Page Industries said in the financial year 2020-21 (FY21) annual report.

The company has significantly expanded its presence by opening many Exclusive Brand Outlets (EBO’s) and through expansion of multi-brand outlets, making the brand available and accessible to consumers across the entire length and breadth of the country, it said.

Driven by strong demand for work from home (WFH) athleisure wear, Page reported healthy sales growth in the January-March quarter of the financial year 2020-21 (Q4FY21). However, lockdown in most states resulting in closure/restricted operating hours/days of physical retail stores is likely to negatively impact the sales momentum in the first quarter of the current financial year 2021-22 .i.e. April-June quarter (Q1FY22).

Brokerage ICICI Securities anticipates Page will report quarter-on-quarter (QoQ) revenue de-growth of 47 per cent to Rs 459 crore in Q1FY22E. Volumes are expected to decline 49 per cent QoQ while realisation is expected to be higher by 2 per cent to Rs 194 per piece, owing to change in product mix.

“We expect gross margins to decline 260 basis points (bps) QoQ to 55 per cent (48.1 per cent in Q1FY21). Also, on account of negative operating leverage, we expect EBITDA margins to decline substantially from 19.3 per cent in Q4FY21 to 3.4 per cent in Q1FY22E. Subsequently, we expect the company to report net loss of Rs 1.7 crore (vs. net profit of Rs 116 crore in Q4FY21 and loss of Rs 40 crore in Q1FY21),” ICICI Securities said in a result preview.

Meanwhile, brokerage Emkay Global Financial Services expects the recovery to be better at around 55 per cent pre-Covid revenues (vs. 35 per cent recovery last year) in Q1FY22. The recovery to be better than fashion players, in line with trends seen during FY21, it said adding that Ebitda (earnings before interest, taxes, depreciation, and amortization) margins will be better, led by both better gross margins as well as lower negative operating leverage.