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MUMBAI :
Till about two years in the past, the Page Industries Ltd inventory was a extremely wanted one on the Street. The firm’s shares had risen about 80 occasions within the ten-year interval between August 2008 and August 2018. But since its peak two years in the past, the inventory has nearly halved. While the corporate’s revenues and income had been hit within the June quarter owing to the pandemic, traders are extra nervous concerning the long-term growth potential.
“There is no indication that the company, which has reported flattish earnings per share over the past two years, has turned the corner on the path to topline and earnings growth,” analysts from Motilal Oswal Financial Services Ltd mentioned in a be aware on Page’s Q1 earnings. The firm’s shares have fallen over 6% because it introduced weak results for the June quarter. The firm reported an Ebitda (earnings earlier than curiosity, tax, depreciation and amortisation) lack of nearly Rs35 crore final quarter.
Page did say in its publish results earnings name that August gross sales have just about reached year-ago ranges. But not everybody’s holding their breath. Kotak Institutional Equities mentioned in a report on 4 September, “Page reported a disappointing 1QFY21 earnings print with the income print not doing any justice to the super-bullish qualitative commentary provided by the administration within the 4QFY20 earnings name.”
The proof of the pudding might be in its consuming. For now, traders are nervous that the corporate’s issues transcend covid, given the sluggishness in growth previously two years. “In the previous two years, (Page’s) growth has been way more modest, with gross sales/Ebitda rising ~7%/-1%. The creation of competitors in premium innerwear, general slowdown in demand, and liquidity issues within the commerce are key components affecting efficiency,” Motilal Oswal’s analysts level out.
In Q1, revenues declined sharply by as a lot as 66% year-on-year to about Rs285 crore, coming in decrease than Street estimates. Reflecting the complete impression of the covid-19 lockdown, gross sales volumes dropped by an enormous 69%. Even so, common promoting value (ASP) improved due to the higher efficiency of the athleisure section. In holding with the pandemic occasions, Page mentioned it noticed substantial growth in e-commerce.
But higher ASPs and better e-commerce growth didn’t transfer the needle materially. The greater disappointment was the contraction of practically 700 foundation factors in gross revenue margin to 48.1%.
Despite the awful backdrop, Page shares nonetheless take pleasure in expensive valuations of about 46 occasions estimated monetary yr 2022 earnings.
Going forward, the uncertainty on the tempo of recovery stays excessive. “Although Page appears to be comparatively higher positioned as a result of work-from-home–led demand for its athleisure merchandise, given the numerous deceleration in growth over FY19-20, we await extra readability on recovery developments,” mentioned Emkay Global Financial Services Ltd’s analysts in a report on 3 September.
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