PremiumListen to this article |
Shares of Page Industries Ltd. surged around 7% on the National Stock Exchange in early deals on Friday. The Street has given a thumbs-up to the company's Q4FY22 earnings performance. Revenue at ₹1,111 crore and operating margin at 24% exceeded consensus estimates of ₹1,061 crore and 20.5%, respectively.
In a post earnings conference call, the management said sales growth was robust in Q4 across product categories and sales channels. Growth was driven by its retail expansion, and introduction of new products. In Q4, it clocked a volume growth of 7% and 28.9% in FY22. In terms of number of units, it sold 50 million pieces in 4Q versus 46 million in the same quarter last year. The management said outlook remains strong and reiterated its target of achieving $1 billion in sales by FY25-26.
That said, cost inflation remains a headwind for the company in the near future. Page Industries has not undertaken price hikes after the 8% price increase taken in December.
However, the management would be closely monitoring the raw material situation and further price increases would depend on that. Note that the management aims to maintain Ebitda in the 20-22% range. Ebitda is short for earnings before interest, tax, depreciation and amortization.
According to analysts at Yes Securities Ltd., the company's margin performance was helped by price hikes of 5% in 1Q and 8% in 3Q, but 4Q margin levels might be difficult to sustain given further increase in yarn prices. However, the domestic brokerage house is of the view that continued premiumisation across product segments should take up margins towards 21‐22%.
Similarly, analysts at Emkay Global Financial Services Ltd. said that unlike peers, the company was able to negate the raw material spike through lower price hikes at around 15% over pre-Covid versus 30% by peers. "While raw material pressure remains, Page Industries expects to remain in the 20-21% EBITDA margin range with the help of inventory stocking (92 days now vs. 72/89 days in FY21/FY20)," said the Emkay report.