Dolat Capital is bullish on Page Industries has recommended buy rating on the stock with a target price of Rs 30,030 in its research report dated February 14, 2019.
Dolat Capital's research report on Page Industries
Page Industries’ reported ~12% volume growth – strong recovery after reporting flat volume growth in Q2. The growth was impressive considering strong base of 11% and increased competition in the category. We attribute this to shift in festive season which resulted in pent up demand during the quarter. The operational performance during the quarter came ahead of our estimate primarily due to 150bps expansion in GM. We continue to believe that with the changing economy, branded innerwear market would continue to report double-digit volume growth and Page will enhance the most, being a leader in the category. We do not see price pass on as a challenge during inflationary environment as the company has robust brand recognition in the premium category. Though the company is likely to mitigate the competition with strong brand positioning, ongoing innovations, increasing number of stores and wide distribution reach, we believe that the monopoly of the company has come to an end in the category. Consequently, we believe that the historical P/E multiple would not sustain.
Outlook
Hence we have revised our target multiple to 50x (in line with HUL vs 20% premium earlier). Considering recent price correction, we view the stock as an attractive investment opportunity at CMP. Maintain BUY with TP of ` 30,030.
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