Page Industries stock plunges post Q4 results

shares Page Industries Limited On Friday it fell 15 per cent to a low of ₹34,968.60 on BSE as the company reported a 58.87 per cent drop in net profit at ₹78.35 crore for the fourth quarter ended March 31 due to higher inventory cost and lower capacity utilization.

Its revenue from operations decreased by 12.78% at Rs. 969.09 crore (Rs. 1,111.11 crore).

However, the stock partially recovered to close at ₹ 37,456.25 – down nine percent from the previous day’s close of ₹ 41,139.50.

For the financial year ended March 2023, Jockey’s underwear brand net profit increased by 6.46 per cent to Rs. 571.24 crore (Rs. 536.53 crore) and revenue from operations increased by 23.21 per cent to Rs. 4,788.63 crore.

Temporary effect

The company’s Managing Director VS Ganesh said the year was challenging with an overall decline in consumption. This effect is temporary and maintains a positive outlook on demand. However, analysts are disappointed with the performance and see tough days ahead.

According to Emkay Global Financial, which advised a ‘Sell’ on the stock with a target price of Rs 35,000, said its Q4 PAT was 40 per cent below estimate, led by a comprehensive failure.

Page Industries expects margin to continue on the recovery path, with low-cost inventory realization and a focus on cost savings (along with marketing). “But we believe revenue recovery is critical to track margin to the 19-21% target range (vs. 15% in H2FY23).”

Axis Securities said, “We like management’s no-brainer focus on expanding distribution across smaller channels and cities, along with a strong stance on implementing ARS across its retail network despite near-term volume pressure. It will make Page leaner and stronger than the competition in the long term.” However, near-term challenges such as weak demand environment and ARS implementation will sustain volume growth and margin trajectory.”

Elara Securities said, “We believe Page Industries derives strong operating leverage from the strong recall of its Jockey brand. We expect that in the near term the pressure due to the implementation of ARS will be offset by the benefits derived from the enhanced business model.”

The share price has been under pressure over the past six months and is down more than 20 percent. “Given the rich valuations (58x FY25) and moderate growth prospects (due to increased competitive intensity), we believe the share price does not offer upside,” ICICI Securities said.