Page Industries Ltd. share price target

Page Industries, also known as Jockey India, is a publicly listed company which is the licensee of Jockey International and Speedo in India and Sri Lanka.

PAG's structural story remains attractive with the management targeting 20%revenue growth over the long term. Initiatives like outsourcing and EBO expansion are likely to facilitate faster growth and superior asset turns. In fact, as the annual report reveals, inventory days have already declined sharply from 100 days in FY17 to 85 days in FY18. Increased focus on technology implementation across the distribution channel should also ensure better efficiencies and decision making, and higher asset turns. Extension of the Jockey franchise agreement to the year 2040 (from 2030 earlier)and continuance of royalty at 5% (announced last month) provides comfort

Expansion in production facilities to drive volume During FY18, Page Industries has expanded installed capacity across various units spread over 2.4 mn sq ft across 14 locations in Karnataka. The Tape dyeing plant set up during FY18 in Karnataka is fully operational, augmenting women's business. Completion of expansion work in Karnataka Industrial Areas Development Board Industrial Area will facilitate warehousing activities and thereby boost production capacity of women's product range. The company is setting up a manufacturing facility of 0.5 mn...

Page Industries, also known as Jockey India, is a publicly listed company which is the licensee of Jockey International...

Revenues for Q4FY18 grew 22% YoY to | 608.4 crore (I-direct estimate: | 588.8 crore). The revenue beat was mainly driven by higher blended realisations, up 16% YoY to | 164/piece. Overall volumes for the quarter grew 6% YoY 36.5 million pieces Elevated raw material prices led to a decline in gross margins by 188 bps YoY to 62.6%. However, with controlled operating expenses and lower employee expenses (down 3% YoY to | 98.6 crore), EBITDA margins improved significantly by 455 bps YoY to 24.1% (highest ever...

Growth momentum will sustain given the large opportunity in existing segments and entry into newer segments. Factoring in the efficiency gains, we increase FY19-20E earnings estimates by 7-8%. Valuation at 50x FY20E EPS limits near term upsides. Maintain HOLD...

Expansion of Exclusive Brand Outlets (EBOs) is happening at a massive pace. The company is adding ~80 outlets in February/March 2018 and likely another 500 inFY19, taking the total EBO count to ~1,000 by end-FY19. After forming ~15% of sales in FY17, EBOs are expected to contribute ~40% of sales by FY20 - the year when all the new EBOs will complete at least a year of operations. With average cash breakeven in 3-4 months and payback of around 2 years, EBOs are an attractive business proposition to third-party franchisees. Compared to MBOs, the potential for cross-selling is huge in EBOs.

Q3 above estimates: Sales/EBITDA/PAT grew 18%/30%/33%. EBITDA margin improved 200 bps to 20.8%, as higher input costs (up 410 bps) was offset by reduced staff costs (down 200 bps on increased share of outsourced manufacturing)

Page Industries' Q3FY18 results were above our estimates across all parameters. Page registered health topline growth of 18% YoY to | 621.0 crore (I-direct estimate: | 617.4 crore). The revenue beat was mainly on account of robust volume growth (11.3% YoY to 39.7...

Sector: Apparels /Mid-Cap | Earnings Update 3QFY18 Background: Page Industries is the exclusive licensee of Jockey International Inc (USA) to manufacture and distribute Jockey brand in India, Sri Lanka, Nepal, Bangladesh and UAE till 2030. They broadly operate in premium men's innerwear; women's innerwear and leisure wear segments. Jockey enjoys high brand recall and they spend ~5% of their annual sales for brand building and promotional activity, which enables them to dominate most of the segments in which they operate. In the men's and women's segment, they have a market share of ~21% and ~12% respectively. They are also exclusive licensee of Speedo swimwear brand in India. Page has...