Page Industries’ Robust June Quarter Performance: Is It Time to Invest?
Page Industries, the notable player in the apparel industry, has unveiled impressive results for the June quarter. The period has witnessed a notable surge in the company’s margins and volumes. The company’s outlook projects further volume augmentation during the third quarter of this fiscal year, set in motion by the onset of the festive season. An encouraging update follows the conclusion of the adverse impact of the Auto Replenishment System (ARS), with primary sales now aligned with secondary sales. Bolstered by a strong brand image and favorable return ratios, Page Industries remains optimistic about its sustained growth trajectory.
Analysts echo optimism regarding Page Industries’ stock performance. Their advice is steering towards heightened investment in this stock. However, the June quarter presented a 7% decline in the company’s revenue on a year-on-year basis, coupled with an 11% volume decline. These outcomes are attributed to both market sentiment fragility and the high base of the preceding year’s June quarter. Nevertheless, the company witnessed a remarkable 31% volume surge on a quarter-on-quarter basis.
Notably, the realization rate surged by approximately 4% in the June quarter. This uplift contributes to both improved pricing and a favorable product mix. The company highlights robust growth in the premium men’s innerwear segment, while the athleisure segment showcases positive signs. On the margin front, there was a dip of around 300 basis points year-on-year. However, an impressive surge in margins is evident on a quarter-on-quarter basis, aligning with the company’s long-term margin guidance of 19-21%.
Page Industries anticipates that the impact of the Auto Replenishment System will wane, aligning primary sales with end-retail sales in the future. The company’s inventory levels have normalized by the end of the June quarter, and a healthy growth trajectory is anticipated for innerwear sales. This segment experienced a slowdown over the last few quarters, with a rebound anticipated in the third quarter of this fiscal year, driven by festive season sales and enhanced consumer spending.
Page Industries is strategically expanding its distribution channels, focusing on both metros and tier 1 cities as well as newer tier 2 and 3 cities. The company’s expansion also includes Exclusive Business Outlets (EBO) and large format stores (LFS), catering to evolving consumer preferences. A strong emphasis is being placed on e-commerce sales to elevate the online shopping experience.
As per current share prices, Page Industries’ valuation is at 55 times estimated earnings for the next fiscal year. Given the company’s robust growth trajectory and promising long-term potential, analysts suggest considering increased investment in its shares for potential favorable returns.