Allergy of Porinju Veliyath and Shyam Sekhar for Page Industries
It is well known that Porinju Veliyath has an allergy towards certain high quality stocks. He cites these stocks as examples of “fancy” when compared to “value” stocks.
Page Industries is one such stock which is in Porinju’s hit-list. The others include Kitex Garments, Ashiana Housing etc.
Shyam Sekhar and Porinju Veliyath launched a scathing attack on Page Industries in August 2015.
Good, reliable numbers from Page. The bulls still have their underwear on them. Thank God for sparing us an ugly sight.
— Shyam Sekhar (@shyamsek) August 14, 2015
Page is over-priced unless govt makes it compulsory to wear 2 underwears, like superman 🙂 https://t.co/OVTovP99Lq
— Porinju Veliyath (@porinju) August 14, 2015
@picker_stock @porinju I heard you say this. And saw a page worshipper get red-faced. Was a funny scene. January 2015.
— Shyam Sekhar (@shyamsek) August 14, 2015
No doubt, the two stalwarts were joking.
Page Industries gives 53% return since then
The criticism regarding Page Industries being overpriced in August 2015 appears to be justified because since then the stock has given a return of 53%.
These are average returns when we bear in mind that in the same period of about 24 months, the CNX Midcap Index has also given a return of about the same figure. The Nifty has given a return of 32%.
In fact, the bulk of the return from Page Industries has come in the past one year because the YoY return is 58%.
Shyam Sekhar had rightly predicted that the stock would see time correction.
@joslinjose9 @porinju Page biz will do decently for long. But, it's stock price to see time correction. Like we saw in Infy from 2000-2008.
— Shyam Sekhar (@shyamsek) August 15, 2015
Basant Maheshwari pocketed 40x multibagger gains from Page Industries
Basant Maheshwari is acknowledged as the first discoverer of Page Industries.
He publicly recommended the stock in July 2011 when the stock was quoting at Rs. 1940.
He described Page Industries as a “great company”. He also provided a masterful definition of a “great company”.
“A great company is something that generates high return on capital, has got free cash-flow, generates a lot of return on capital and over a period of time that free cash flow should translate into dividends for shareholders because if you keep putting that money back into the business”.
It is unbelievable that the stock is up a fabulous 1050% (10-bagger) since then.
Basant timed his exit from Page Industries perfectly, after raking in mammoth gains of 4000% (40-bagger).
@BMTheEquityDesk Do you regret to exit Page industries? When brokers are revising its target for higher valuations
— HighGrowth Investor (@jayyshukla01) November 10, 2017
No regrets – only happiness. We made our money elsewhere though. https://t.co/dCHvw9kheI
— Basant Maheshwari (@BMTheEquityDesk) November 10, 2017
It was 40x excluding dividends.
— Basant Maheshwari (@BMTheEquityDesk) November 10, 2017
Page Industries’ strong earnings traction continues; it deserves high valuation: Motilal Oswal
Page Industries is still not a spent force. It reported robust Q2FY18 results.
#Q2WithAwaaz | #PageIndustries | मुनाफा 69 Cr से बढ़कर 84 Cr, आय 535 Cr से बढ़कर 626 Cr, EBITDA मार्जिन 20.1% से बढ़कर 20.5% pic.twitter.com/yLS9j9JIki
— CNBC-AWAAZ (@CNBC_Awaaz) November 9, 2017
The robust results have enthused Motilal Oswal to rush out a buy recommendation. The logic is as follows:
“Strong earnings traction continues; deserves high valuation
– PAGE’s net sales grew at a strong 17.1% YoY to INR6.26b (est. of INR6.45b), with 7.9% YoY volume growth. Mix improvement was well ahead of expectation. Men’s innerwear, Women’s innerwear and Sportswear segments grew at 14%, 20% and 20% YoY, with volumes increasing 4%, 14% and 15% YoY, respectively. Speedo sales grew 27% YoY, with 7% YoY volume growth.
– Gross margin shrunk 200bp YoY to 57.6%. This was offset by lower employee costs (-90bp YoY) and other expenses (-160bp YoY), resulting in EBITDA margin expansion of 40bp YoY to 20.5% in 2QFY18. Thus, EBITDA grew at a healthy 19.5% YoY to INR1.28b (est. of 1.29b). Adj. PAT rose 22.4% YoY to INR841m (est. of INR825m).
– Robust cash flow generation: We note that the net working capital increase of 16% YoY has been far lower than the sales increase of over 20% in 1HFY18. Other current and non-current assets have declined both YoY and QoQ. Net cash and cash equivalents have thus gone up from INR813m at end-1HFY17 to INR2.27b at end-2QFY18.
– Management interaction takeaways: (1) Management expect sales trajectory to continue. (2) Yarn costs remain soft – have been on a downtrend since August (saw a blip-up in October before coming down).
– Valuation view: We believe PAG offers a compelling, capital-efficient long-term lifestyle play on the premiumizing innerwear category. A widening branded product portfolio, coupled with distribution expansion, will aid market share expansion and drive multiple years of growth, in our view. Unlike retail peers, PAG has shown a remarkable ability to maintain strong double-digit volume growth and high RoEs, making it fully deserving of high valuations. Continued impressive performance leads us to upgrade forecasts for FY19/20 by 4%/7%. Maintain Buy with a TP of INR25,580 (50x December 2019E EPS, a 10% discount to three-year average P/E).”
Growing from strength to strength
Page Industries appears to be on an aggressive expansion drive. It is setting up a manufacturing unit near Raptadu in Andhra Pradesh over 30 acres of land and will provide employment to 6,000 locals.
Page Industries(Jockey) to setup manufacturing unit near Raptadu,Anantapur (Opposite Kia plant) in 30 acres. Employment for 6000. GO issued pic.twitter.com/vD8JJtbOud
— AP Development Forum (@apdevforum) November 3, 2017
Also, Sunder Genomal, the MD, indicated that most of the company’s products are in the sub-Rs. 1,000 range and that they would benefit from the lower GST rates.
Sunder Genomal, MD, Page Industries: Most of co's product is in the sub-`1,000 range @Navin_Shetty1 @CNBCTV18Live pic.twitter.com/pSVgB7Qr1o
— CNBC-TV18 News (@CNBCTV18News) September 11, 2017
He also revealed that the brand penetration as a whole is only 15-16% of the target innerwear market, implying that there is huge scope for growth.
Page Industries Ltd: Brand Penetration as a Whole is 15-16% Of The Target Market; Things Will Settle Down Post #DeMonetisation and #GST pic.twitter.com/tZMf5l0QEQ
— BTVI Live (@BTVI) September 11, 2017
So, it appears that Porinju Veliyath’s prophecy that Page Industries’ survival is dependent on the Government making it compulsory for all citizens to wear “two underwears” will thankfully not come true!
What is happening in shyam shekars sintex industries? Page looks much better in comparison
Just shows Quality is Quality.
sintex with page why bro ???
Sujay is commenting on the investment analysis ability of SS between the two stocks, not the two stocks by themselves.
We all have biases of a specific industry vs another, a stock vs another. Warren Buffett says he doesnt like IT companies, I lost a big chunk by not trusting some great stocks in the sugar industry pointed out to me (I didnt realise that sugar companies supply to the alcohol, chemical and pharma companies too!). So, each one has his say, his way. Some make money, others lose.
My problem with Page is not about the two underwears. I am worried, the way things are going with lesser and lesser clothes being worn (by the fairer-sex), an underwear-less revolution could doom Page and other (innerwear) clothing companies!!!
Gem you sound exactly like Shyam on a lighter note!
All Diwali picks have made investors diwala