Page Industries may find it tough to replicate Q2 success

Page Industries Ltd’s investors seem confident after its September quarter (Q2FY25) results beat expectations on key parameters. The stock hit a new 52-week high of ₹48,393.70 on Monday and has been up about 5% since the results were announced on 7 November.

Revenue growth returned to double-digit in Q2FY25 of around 11% year-on-year after being lacklustre for the previous seven quarters. A low base helped, but management highlighted that growth was seen across channels, driven by the e-commerce channel, mainly quick-commerce.

The beginning of festival season toward September end indicated encouraging signs, but the management said it is yet to see a significant revival in consumer sentiment. Tier 2 and tier 3 towns continue to see better demand trends versus metros and tier-1 aided by a gradual uptick in rural consumption.

Page holds the exclusive license for the manufacture, marketing and distribution of the Jockey brand in some countries, including India.

Also Read: Page Industries sees uptick, but growth hurdles persist

Rationalization of channel inventory has been a niggling worry for Page investors, but the management is hoping for a complete normalization in the second half of FY25. That said, the management will revisit its earlier $1 billion revenue guidance for FY26 in Q3FY25 as achieving this target could take longer than anticipated due to sluggish demand seen over the last two years.

Volumes grew 6.6% year-on-year to 55.2 million pieces. Page has not raised prices since July 2022. Average selling price growth of 4% in Q2FY25 was led by premiumization within categories, favorable category mix, and acceleration in e-commerce channels. No price hike is expected in the remainder of FY25.

Aggressive cost control and easing raw material prices pushed Ebitda margin to multi-quarter high of 22.6% in Q2FY25. The management maintained its margin guidance of 19–21% for FY25 on increased technology-related spending in Q3FY25 and Q4FY25.

Sustaining the earnings improvement seen in Q2FY25 is crucial to justify its rich valuation and reverse the stock’s underperformance. The stock trades at 65 times FY26 estimated earnings, showed Bloomberg data. In the last two years, the stock has given negative returns (-0.44%) compared to benchmark Nifty 50 index’s 32% returns, punished for weak volumes and poor revenue growth.

Page’s increased focus on expanding distribution through multiple channels and smaller cities should boost volumes and aid penetration. In the first half of FY25, the exclusive brand outlets (EBO) addition was muted with just five stores being opened. But the management has set a target of adding 150-160 new EBOs by FY25-end. Still, muted demand and stiff competition may weigh on near-term volume growth.

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