11 February 2016
Q3FY16 Results Update | Sector: Consumer
Page Industries
Buy
BSE SENSEX
22,952
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, (INR m)
Free float (%)
S&P CNX
6,976
PAG IN
11.2
121.8 / 1.8
16,995/9,871
-11/-7/13
181
49
CMP: INR10,878
TP: INR14,000(+29%)
In-line performance; 10% volume growth in a soft market environment
Financials & Valuations (INR b)
Y/E Mar
2016E 2017E 2018E
17.9 22.3 28.0
Net Sales
3.8
4.7
6.1
EBITDA
2.4
3.0
3.9
PAT
212.6 265.8 349.1
EPS (INR)
21.0 25.0 31.3
Gr. (%)
453.1 586.0 760.5
BV/Sh (INR)
46.9 45.4 45.9
RoE (%)
41.5 42.5 45.1
RoCE (%)
51.2 40.9 31.2
P/E (x)
32.0 26.0 20.1
EV/EBITDA (x)
Estimate change
TP change
Rating change
3%
Page Industries 3QFY16
net sales grew 14.9% YoY to INR4.4b (est. INR4.4b)
with 10.6% volume growth. EBITDA grew 14.9% YoY to INR894m and Adj. PAT
grew 26.3% YoY to INR565m (est. INR567m) after adjusting for differential
bonus liability of INR65.1m for 1HFY16. As per management, market
environment continues to be soft with broad based slowdown across regions.
3QFY16 volumes grew 10.6% YoY
(9MFY16 volumes up 10.5%) with pricing
component being 3.9% (4.8% for 9MFY16). Men’s Innerwear, women’s
innerwear and leisure wear segment posted 13.6%, 26.5% and 11.3% growth
respectively with volume growth of 10.1%, 19.9% and 3.9% respectively.
Leisure wear segment volumes were impacted due to withdrawal of
consumer/trade offers.
Gross margin expanded 80bps YoY
to 55.8% (est. 56.1%). However higher
employee costs (up 20% YoY due to differential bonus liability of INR22.3m in
3QFY16) and higher other expenses (up 10bps YoY) resulted in flattish EBITDA
margin YoY to 20.3% (est. 21.3%). Lower tax rate (down 590bps YoY) due to
certain exemptions resulted in Adj. PAT growth of 29.9% YoY to INR565m (est.
INR567m).
Management interaction takeaways:
i) Leisure wear segment volumes have
stabilized and the segment is now posting double digit growth, ii) Generally
PAGE takes price hikes in January, but it is awaiting clarity on GST (it could
initiate ~8% price hike post budget), iii) Tax rate for FY16 should trend at
9MFY16 levels.
Valuation and view:
Page 3QFY16 results were largely in-line with our
estimates; however we have tapered our estimates (2-3%) for FY17E/FY18E to
factor in moderation in sales (demand revival yet to see pick up) and lower tax
rates. We believe, Page offers a compelling, capital-efficient long-term lifestyle
play on the premiumizing innerwear category. A widening product and brand
portfolio, coupled with distribution expansion will aid share expansion and
drive multiple years of growth, in our view. Maintain
Buy
with a revised target
price of INR14,000 (40x FY18E EPS – three year average P/E).
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Gautam Duggad
(Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404
Manish Poddar
(manish.poddar@motilaloswal.com); +91 22 3027 8029/
Vishal Punmiya
(Vishal.Punmiya@MotilalOswal.com)

Page Industries
Operating metrics
Exhibit 1: Quarterly operational data
Volume ('000)
Men innerwear
Women innerwear
Leisure wear
Speedo
Total
% YoY
Men innerwear
Women innerwear
Leisure wear
Speedo
Total
Sales value (INR m)
Men innerwear
Women innerwear
Leisure wear
Speedo
Total
% YoY
Men innerwear
Women innerwear
Leisure wear
Speedo
Total
Avg realization
(INR/unit)
Men innerwear
Women innerwear
Leisure wear
Speedo
Total
% YoY
Men innerwear
Women innerwear
Leisure wear
Total
3QFY14
15,352
5,048
5,266
51
25,717
3QFY14
10.4
21.9
45.5
70.3
18.6
3QFY14
1,462
532
1,005
27
3,026
3QFY14
25.2
31.0
75.2
90.3
40.0
3QFY14
95
105
191
525
118
3QFY14
13.3
7.4
20.4
18.0
4QFY14
12,603
4,601
4,972
176
22,353
4QFY14
9.4
19.4
36.6
(9.7)
16.4
4QFY14
1,263
525
907
91
2,786
4QFY14
24.6
27.6
61.5
(0.5)
34.1
4QFY14
100
114
182
517
125
4QFY14
13.9
6.9
18.2
15.2
1QFY15
18,268
6,407
5,641
163
30,478
1QFY15
4.0
15.7
18.8
41.0
9.0
1QFY15
1,914
687
1,088
90
3,779
1QFY15
18.1
27.1
32.4
66.7
24.4
1QFY15
105
107
193
554
124
1QFY15
13.6
9.9
11.4
14.2
2QFY15
19,621
5,866
5,769
54
31,310
2QFY15
22.4
16.2
22.1
8.6
21.1
2QFY15
2,048
683
1,114
31
3,875
2QFY15
37.9
33.8
30.5
24.4
34.9
2QFY15
104
116
193
564
124
2QFY15
12.7
15.1
6.9
11.4
3QFY15
17,745
5,547
6,304
34
29,630
3QFY15
15.6
9.9
19.7
(33.5)
15.2
3QFY15
1,869
663
1,215
19
3,766
3QFY15
27.9
24.6
20.9
(27.7)
24.5
3QFY15
105
119
193
571
127
3QFY15
10.6
13.4
1.0
8.0
4QFY15
17,460
5,670
5,900
16
29,046
4QFY15
38.5
23.2
18.7
(90.9)
29.9
4QFY15
1,854
671
1,099
95
3,720
4QFY15
46.8
27.8
21.3
4.1
33.5
4QFY15
106
118
186
5,920
128
4QFY15
5.9
3.7
2.2
2.7
1QFY16
19,776
7,747
6,023
165
33,712
1QFY16
8.3
20.9
6.8
1.7
10.6
1QFY16
2,167
922
1,202
92
4,383
1QFY16
13.2
34.2
10.5
2.2
16.0
1QFY16
110
119
200
557
130
1QFY16
4.6
11.0
3.4
4.9
2QFY16
20,727
6,681
7,101
65
34,575
2QFY16
5.6
13.9
23.1
19.3
10.4
2QFY16
2,233
865
1,381
37
4,515
2QFY16
9.1
26.7
23.9
20.6
16.5
2QFY16
108
129
194
570
131
2QFY16
3.2
11.2
0.7
5.5
3QFY16
19,540
6,650
6,550
30
32,770
3QFY16
10.1
19.9
3.9
(11.7)
10.6
3QFY16
2,123
838
1,352
15
4,329
3QFY16
13.6
26.5
11.3
(21.9)
14.9
3QFY16
109
126
206
505
132
3QFY16
3.2
5.5
7.1
3.9
11 February 2016
2

Page Industries
Exhibit 2: Sales growth for 3QFY16 stood at 15%
Sales (INR b)
35.5
25.6
39.4
30.7
39.9
33.4
24.3
Sales growth (%)
35.5
24.5
16.0 16.4 15.0
21.6 20.9 30.4 28.8 30.3 27.9 37.8 39.0 37.7 37.2 43.8 45.4 43.3
33.4
Exhibit 3: Gross margin expanded 80bps YoY to 55.8%
Gross margin (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 4: Employee and Other expenses are up 80bps (after
adjusting for 1HFY16 bonus payout) and 10bps respectively
Other expenses (% of sales)
Employee costs (% of sales)
Exhibit 5: ..thus EBITDA margin stood flat
EBITDA margin (%)
Source: Company, MOSL
Source: Company, MOSL
Valuation and view
Page 3QFY16 results were largely in-line with our estimates; however we have
tapered our estimates (2-3%) for FY17E/FY18E to factor in moderation in sales
(demand revival yet to see pick up) and lower tax rates.
We believe, Page offers a compelling, capital-efficient long-term lifestyle play on
the premiumizing innerwear category. A widening product and brand portfolio,
coupled with distribution expansion will aid share expansion and drive multiple
years of growth, in our view.
Maintain
Buy
with a revised target price of INR14,000 (40x FY18E EPS – three
year average P/E)
Exhibit 6: Revised estimates by 2-3%
Sales
EBITDA
PAT
FY16E
17,890
3,828
2,372
New
FY17E
22,261
4,706
2,965
FY18E
28,010
6,092
3,894
FY16E
18,044
3,927
2,375
Old
FY17E
22,940
4,861
3,037
FY18E
28,955
6,286
3,980
FY16E
-1%
-3%
0%
Change (%)
FY17E
-3%
-3%
-2%
FY18E
-3%
-3%
-2%
Source: Company, MOSL
11 February 2016
3

Page Industries
Exhibit 7: Page Inds P/E (x)
80.0
60.0
40.0
20.0
0.0
27.1
9.2
45.2
PE (x)
Peak(x)
Avg(x)
72.7
Min(x)
300
200
100
0
-100
60.8
189.1
Exhibit 8: Page Inds P/E relative to Sensex
Page Inds PE Relative to Sensex PE (%)
LPA (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 9:
Valuation
Metrics of coverage universe
Company
Consumer
Asian Paints
Britannia
Colgate
Dabur*
Emami*
Godrej Consumer
GSK Consumer
Hind. Unilever
ITC
Jyothy Labs
Marico*
Nestle
Page Industries
Pidilite Inds.
Radico Khaitan
United Spirits
Retail
Jubilant Foodworks
Shopper's Stop
Titan Company
Reco
Neutral
Buy
Neutral
Neutral
Buy
Neutral
Buy
Neutral
Neutral
Buy
Neutral
Neutral
Buy
Buy
Buy
Buy
Buy
Neutral
Neutral
Price
(INR)
855
2,637
828
238
1,010
1,187
5,793
799
299
268
229
5,224
10,878
579
99
2,313
1,063
360
355
Mkt Cap EPS Growth YoY (%)
(USD M) FY16E FY17E FY18E
12,009 27.0
4,630 49.8
3,297
7.1
6,135 15.0
3,357 15.1
5,917 24.5
3,566 20.0
25,298
5.0
35,140
2.7
711 26.4
4,315 25.8
7,373 -21.8
1,776 21.0
4,348 48.5
192 -3.0
4,920
LP
1,020
433
4,619
4.5
32.6
-7.2
15.1
18.9
14.3
16.2
22.6
20.0
15.6
10.9
10.4
-8.7
15.5
25.7
25.0
10.2
31.5
76.9
53.2
35.8
20.9
9.9
14.0
14.1
12.5
16.9
14.4
9.4
14.2
14.3
12.6
12.4
22.3
31.3
15.1
28.9
46.6
42.6
39.7
13.2
P/E (x)
EV/EBITDA (x)
ROE (%) Div. (%)
FY16E
35.2
57.8
72.6
33.0
40.6
23.2
30.5
110.3
30.4
19.6
35.5
34.2
46.9
29.8
9.5
48.1
15.8
6.8
21.2
FY16E
1.2
1.0
1.9
1.0
1.1
0.8
1.2
2.1
2.3
1.5
0.9
1.4
0.8
0.7
1.0
0.0
0.4
0.4
0.7
FY16E FY17E FY18E FY16E FY17E FY18E
45.4
36.8
37.6
34.1
41.0
35.8
34.8
43.5
24.3
30.2
40.9
51.3
51.2
38.9
15.4
80.5
60.0
55.6
41.3
39.5
30.9
32.9
29.4
33.5
29.8
30.1
39.2
22.0
33.1
35.4
40.8
40.9
35.4
11.7
45.5
39.2
40.9
34.2
35.9
27.1
28.8
26.1
28.6
26.1
27.5
34.3
19.2
29.4
31.5
33.4
31.2
30.7
9.1
31.0
27.5
29.3
30.2
31.0
25.5
23.0
27.2
34.0
27.1
24.6
29.9
15.8
25.1
27.4
29.7
32.0
24.4
10.1
37.8
23.9
13.7
31.1
26.5
20.8
20.4
23.2
28.1
23.0
20.9
27.4
14.4
21.1
23.5
24.1
26.0
21.4
8.3
27.3
16.9
11.8
25.5
23.9
17.8
18.3
20.5
24.1
20.7
18.5
24.1
12.7
18.6
20.7
20.1
20.1
18.5
6.9
20.4
12.4
9.7
22.3
Note: For Nestle FY15E means CY14
Source: Company, MOSL
11 February 2016
4

Page Industries
Financials and Valuations
Income Statement
Y/E March
Net Sales
Change (%)
Total Expenditure
EBITDA
Change (%)
Margin (%)
Depreciation
Int. and Fin. Ch.
Other Inc.- Rec.
PBT
Change (%)
Tax
Tax Rate (%)
Adjusted PAT
Change (%)
Reported PAT
2010
3,441
33.2
2,755
686
27.1
19.9
90
27
16
585
25.0
189
32.3
396
25.2
396
2011
4,977
44.6
4,016
960
40.0
19.3
98
48
63
878
50.0
292
33.3
585
47.8
585
2012
6,966
40.0
5,504
1,462
52.2
21.0
106
67
52
1,341
52.8
441
32.9
900
53.7
900
2013
8,758
25.7
6,992
1,766
20.8
20.2
114
80
85
1,657
23.6
531
32.1
1,125
25.1
1,125
2014
11,877
35.6
9,326
2,551
44.5
21.5
139
142
65
2,335
40.9
797
34.1
1,538
36.7
1,538
2015
15,430
29.9
12,240
3,190
25.1
20.7
176
167
86
2,933
25.6
973
33.2
1,960
27.5
1,960
2016E
17,890
15.9
14,062
3,828
20.0
21.4
223
163
72
3,514
19.8
1,142
32.5
2,372
21.0
2,372
(INR Million)
2017E
22,261
24.4
17,555
4,706
22.9
21.1
254
148
89
4,392
25.0
1,428
32.5
2,965
25.0
2,965
2018E
28,010
25.8
21,917
6,092
29.5
21.8
304
132
112
5,768
31.3
1,875
32.5
3,894
31.3
3,894
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Loans
Capital Employed
Gross Block
Less: Accum. Depn.
Net Fixed Assets
Capital WIP
Investments
Curr. Assets, L&A
Inventory
Account Receivables
Cash and Bank Balance
Others
Curr. Liab. and Prov.
Account Payables
Other Liabilities
Provisions
Net Curr. Assets
Def. Tax Liability
Appl. of Funds
E: MOSL Estimates
2010
112
879
990
548
1,538
1,013
237
776
49
30
1,343
946
205
30
163
640
217
18
405
703
20
1,538
2011
112
1,126
1,238
1,150
2,388
1,259
328
931
102
30
2,327
1,647
258
26
395
976
251
78
646
1,351
26
2,388
2012
112
1,546
1,658
759
2,417
1,504
428
1,076
165
18
2,457
1,726
437
31
263
1,263
373
155
734
1,194
36
2,417
2013
112
2,024
2,135
1,007
3,142
1,860
538
1,322
138
10
3,248
2,350
581
46
271
1,518
473
216
830
1,730
57
3,142
2014
112
2,778
2,890
1,632
4,522
2,404
676
1,728
36
0
5,092
3,626
727
35
705
2,239
586
423
1,230
2,853
95
4,522
2015
112
3,756
3,868
1,573
5,440
3,059
886
2,173
1
0
6,061
4,435
884
44
698
2,680
821
504
1,355
3,381
114
5,440
2016E
112
4,942
5,054
1,473
6,526
3,795
1,109
2,687
1
0
6,940
4,803
931
368
838
2,988
833
539
1,615
3,953
114
6,526
(INR Million)
2017E
112
6,424
6,536
1,373
7,909
4,414
1,363
3,050
1
0
8,689
5,977
1,159
525
1,029
3,718
1,037
671
2,010
4,972
114
7,909
2018E
112
8,371
8,483
1,273
9,756
5,718
1,667
4,051
1
0
10,495
7,367
1,458
393
1,278
4,678
1,305
844
2,529
5,817
114
9,756
11 February 2016
5

Page Industries
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
EV/Sales
EV/EBITDA
P/BV
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Asset Turnover (x)
Debtor Days
Leverage Ratio
Debt/Equity (x)
0.9
0.5
0.5
0.6
0.4
0.3
0.2
0.2
0.1
2.5
20
2.9
17
3.2
18
3.1
21
3.1
20
3.0
19
3.1
19
3.2
17
3.2
17
40.0
29.3
47.3
31.4
54.3
39.3
52.7
42.4
53.2
42.6
50.7
41.6
46.9
41.5
45.4
42.5
45.9
45.1
107.8
97.9
14.0
69.3
56.8
0.5
78.9
72.3
10.4
48.2
42.0
0.6
61.9
56.8
8.0
38.5
31.4
0.7
51.2
46.8
6.8
32.0
24.0
0.8
40.9
37.7
5.5
26.0
18.6
1.0
31.2
28.9
4.4
20.1
14.3
1.4
35.5
43.6
88.8
21.0
69.2
52.5
61.3
111.0
26.0
57.7
80.7
90.2
148.6
37.0
53.3
100.9
111.1
191.4
50.0
57.6
137.9
150.4
259.1
60.0
50.9
175.7
191.6
346.8
72.0
48.9
212.6
232.6
453.1
90.9
50.0
265.8
288.6
586.0
113.6
50.0
349.1
376.3
760.5
149.2
50.0
2010
2011
2012
2013
2014
2015
2016E
2017E
2018E
Cash Flow Statement
Y/E March
Profit before Tax
Depreciation
Other Non-Cash & Non-operating activities
Incr in WC
Direct Taxes Paid
CF from Operations
Incr in FA
Free Cash Flow
Pur of Investments
CF from Invest.
Issue of Shares
Incr in Debt
Dividend Paid
Others
CF from Fin. Activity
Incr/Decr of Cash
Add: Opening Balance
Closing Balance
E: MOSL Estimates
2010
585
90
12
-205
-184
298
-247
51
38
-209
0
178
-313
-27
-162
-73
103
30
2011
878
98
40
-720
-298
-2
-281
-283
9
-273
0
603
-286
-46
271
-4
30
26
2012
1,341
106
59
147
-427
1,226
-271
955
18
-253
0
-503
-402
-63
-968
5
26
31
2013
1,657
114
74
-457
-516
871
-435
436
16
-419
0
238
-596
-80
-438
14
31
46
2014
2,335
139
122
-1,098
-750
747
-511
237
22
-489
0
625
-756
-139
-270
-11
46
34
2015
2,933
176
96
-569
-966
1,670
-534
1,136
2
-531
0
-59
-899
-170
-1,128
10
34
44
2016E
3,514
223
91
-248
-1,142
2,438
-737
1,701
72
-665
0
-100
-1,186
-162
-1,448
324
43
368
(INR Million)
2017E
4,392
254
59
-862
-1,428
2,416
-618
1,798
89
-529
0
-100
-1,482
-147
-1,729
158
367
525
2018E
5,768
304
20
-978
-1,875
3,240
-1,305
1,935
112
-1,193
0
-100
-1,947
-131
-2,178
-131
524
393
11 February 2016
6

Page Industries
Corporate profile
Company description
Exhibit 1: Sensex rebased
Page Industries commenced operations in the year
1994 with the key objective of bringing the
innerwear brand “Jockey” to India. The company has
the exclusive right for manufacturing, distribution
and marketing of Jockey International products in
India, Sri Lanka, Maldives, Bangladesh, Nepal and
UAE as well as “Speedo” brand in India. Page
Industries is promoted by the Genomal family who
have been associated with Jockey International Inc
for more than 50 years.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Dec-15
51.0
5.4
34.3
9.3
Sep-15
51.0
5.2
33.7
10.1
Dec-14
51.8
6.3
31.9
9.9
Exhibit 3: Top holders
Holder Name
Nalanda India Fund Ltd
Cartica Capital Ltd
Steadview Capital Mauritius Ltd
ABG Capital
IDFC Premier Equity Fund
% Holding
10.0
7.7
2.9
2.3
2.2
Source: Capitaline
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Sunder Genomal
Nari Genomal
Ramesh Genomal
C Murugesh
Designation
Managing Director
Director
Director
Company Secretary
Exhibit 5: Directors
Name
B C Prabhakar*
G P Albal*
Nari Genomal
P V Menon
Pius Thomas
Pradeep Jaipuria*
Ramesh Genomal
Name
Rukmani Menon*
Sandeep Kumar Maini*
Shamir Genomal
Sunder Genomal
Timothy Ralph Wheeler
V Sivadas
Vikram Gamanlal Shah*
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Haribhakti & Co LLP
R Vijayakumar
Type
Statutory
Secretarial Audit
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
FY18
MOSL
forecast
212.6
265.8
349.1
Consensus
forecast
-
-
-
Variation
(%)
-
-
-
Source: Bloomberg
Source: Capitaline
11 February 2016
7

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