Kotak Institutional Equities – Sell for target price of Rs. 8,000:
“Page’s 3QFY15 results were better versus estimates at the operating profit level. 3QFY15 EBITDA margins at 20.3% (+130 bps yoy) were helped by higher gross margins at 54% (+280 bps yoy) led by declining RM prices; more benefits will flow in the coming quarter. The company has passed on most of these benefits by (1) taking lower price increase in FY2015 and (2) making higher investments in the business, preferring to maintain EBITDA margins in the range of 20-21%. FCF generation in 9MFY15 has been to the tune of Rs. 390 mn. Gross debt has increased to Rs. 1.2 bn from Rs. 1 bn in 4QFY14 due to dividend payment of Rs. 640 mn. We retain our estimates and SELL rating with a revised target price of Rs. 8,000 (Rs. 7,500 earlier) at 30X December 2016E EPS.”
“Page reported steady growth with healthy margin improvement led by gross margin expansion. We believe company would sustain 25-30% revenue and earnings CAGR over FY15-17E. Business growth drivers remain intact led by (1) shift from unorganized to organized (2) new product launches & (3) distribution expansion, while lower inputs & mix would drive 20% EBITDA margins. We retain BUY with DCF-price target of Rs 12,870/Share.”
ICICIDirect – Consistent earning growth to sustain! Hold for target price of Rs. 12,000:
“Page, buoyed by higher volume growth and strong balance sheet, continues to post superior result among its peers in the textile segment. With volume and realisation CAGR of ~20% and 9%, respectively, over FY14-17E we expect the EPS of Page to grow at ~30% CAGR to Rs. 302.8. Further, we believe Page’s growth story will remain multi-pronged and drawn over a longer timeframe. Consequently, we have used DCF based valuation to arrive at target price of Rs. 12000 and have a HOLD recommendation on the stock.”
DOLAT CAPITAL – Accumulate for target price of Rs. 12,992:
“We believe Page Industries strong distribution reach and Jockey brand provides company a strong platform to introduce new products. Its strong franchise ensures a sustained growth of 25%. Given the sustained growth momentum in revenue and earnings, we value the company on DCF. On P/E basis the valuation would continue to look expensive. We estimate a 27% CAGR in revenue and 30% PAT CAGR for the company during FY15-17E. At CMP, the stock trades at 39x FY17E EPS of Rs. 299.5. Our DCF based price target is Rs. 12,992.“
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