First look from ICICI Securities at Page Industries Q4FY20 Results

Revenue for the quarter de-grew 11% YoY (vs analyst estimate of 7.2% de-growth) to Rs 541.3 crore mainly owing to volumes declining 18.7% to ~ 30 million pieces. The company was unable to execute confirmed orders worth Rs 90 crore.

• Gross margins declined 476 bps YoY to 58.8%. We believe higher share of outsourced goods would have led to significant contraction in gross margins. On the opex front, employee expenses grew 8% YoY to Rs. 134.4 crore, while other expenses de-grew 3.7% YoY to Rs 137.3 crore. Owing to negative operating leverage, EBITDA margins contracted sharply by 1100 bps YoY to 8.7% (signfiicantly below analyst estimate of13.0%). Absolute EBITDA de-grew 61% YoY to Rs. 46.9 crore.

• Higher depreciation (up 11% YoY) and lower other income (down 50% YoY) further impacted profitability. Ensuing PBT declined 68% YoY to Rs. 37.7 crore. PAT for the quarter came in at | 31.0 crore (below analyst estimate of Rs. 47.6 crore).

• Despite loss in revenues, better working capital management translated to NWC days coming down by nine days to 89. The company generated healthy CFO worth Rs 476 crore (vs. Rs 229.7 crore) with FCF of | 400.0 crore. Page continues to be a virtually debt free company, having cash balance worth Rs. 117 crore as on FY20.

• As of today,  89% of EBO outlets (677) and 64% LFS touch-points (1290) are operational. The company is witnessing encouraging signs post partial lifting of lockdown, with athleisure segment witnessing strong demand. Post lockdown relaxations, share of revenues from e-commerce space have risen sharply to 10% (vs. 4% in FY20).