Page Industries strong growth due to change in accounting standards

Mumbai: Shares of Page Industries tumbled as much as 9 per cent on Friday even after the company reported strong results for the quarter to December.

Some analysts said the move to Ind-AS 115 accounting standards resulted in higher revenue accretion. The company’s decision to discontinue segmental disclosures also did not go down well with analysts.

The stock lost 8.26 per cent to close at Rs 21,982 on BSE. It has lost nearly 14 per cent in the last three months.

After two quarters of weakness, Page Industries’ performance has seen a sharp sequential recovery. The company posted a revenue and net profit growth of 19 per cent and 22 per cent, respectively, over the previous year.

Company’s EBITDA margin improved 160 basis points year on-year to 22.4 per cent, led by 150 basis points year-on-year gross margin improvement and aided by higher sales of high-margin thermal wear products during the quarter.

Adoption of Ind-AS 115 standards resulted in reporting of Rs 33 crore more in revenue in the December quarter and a Rs 12.4-crore benefit in profit before tax .

Adjusted revenue growth would have been under 14 per cent, according to analysts.

“Ind-AS 115 was adopted for revenue recognition, which is different from previous revenue recognition policy,” said Sameer Kalra, founder of Target Investing. “This is policy change, which has positive impact on earnings, but such policy changes have worried investors.” The decision to discontinue segmental disclosures should have been avoided, some analysts said.