Emkay Global Financial's research report on Page Industries
For Q2FY23, Page Industries’ EBITDA was 11-12% below our/street estimates, led by ~200bps miss in EBITDA margin. While gross margins were in-line, margin miss was driven by normalization of costs and growth investments in marketing/new hires/warehousing. However, Page expects to achieve its targeted EBITDA margin band of 20-22% with softening of RM costs and operating leverage (vs. 19% margin in Q2). Weak macros and large base slowed ‘core-volume’ growth to 7% YoY, but Page expects growth to pick up with distribution expansion, cross-selling of additional categories, and improved product-value proposition. Sorting of supply-chain issues and ARS implementation are also helping to match primary and secondary sales, aiding better channel traction. FY26E target of reaching USD1bn sales (~20% CAGR) is largely factored in our estimates.
Outlook
However, we have trimmed our FY24/25E margin estimates by 70-100bps (6-7% EPS cut), led by Page’s expectations for continued growth investments. Page offers medium-term potential of mid-teen growth; however, we believe that is largely factored in. We maintain Hold with a revised TP of Rs50,900 vs. Rs53,100 earlier (based on 59x Dec-24E EPS vs. 60x Sep-24E earlier). Multiple revision is led by 3M rollover.
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