13 February 2020 PAG reported a disappointing set of numbers on both volumes and earnings, with EBITDA declining 16% YoY in 3QFY20. Reported operating margin was the lowest in 30 quarters, and adjusted for the Ind-AS 116 impact, the margin was among the lowest ever. While the long-term growth potential is high and the past track record impressive, valuations of 55.7x/47.6x FY21/22E EPS are expensive. Management commentary also did not assuage concerns about the lack of earnings recovery in the near term. Maintain 490bp YoY to 17.5% due to higher employee costs (+110bp YoY), partly offset by lower other expenses (-20bp YoY). Investments in technology implementation and staff recruitment (mainly on tech and kids businesses) have also impacted the EBITDA margin. Inventory days have come down to ~75 from 85 as of Mar19. Kidswear has shown an encouraging demand trend.