Page Industries’s outlook remains positive

MUMBAI: Franchisee representative of Jockey, Page Industries posted a strong performance for the March 2012 quarter. Despite weak macro economic environment, not only the company posted a 39% growth in its net sales, but also was able to improve its margins.

Operating margin grew by 110 bps to 14% and its profit before tax margin increased by 170 bps to 15.7%. However, the tax was three times the tax paid in the corresponding quarter of the previous fiscal due to which the quarter’s net profit grew only by 32.5% as compared to profit before tax which grew by 55%.

As on 31st March, the company’s inventory to sales was lower year on year. This old inventory clearance will enable the company to launch wider range products with new designs and increase its price range.

Going ahead, the company will also have lesser inventory to be cleared at discounted rate. These will help the company to improve its margins going ahead.

At the current market price of Rs 3100, the company is trading at a price to earning multiple of 38. Company’s outlook for FY13 remains positive and a growth of 40% is expected. With such high growth and high return on equity of 60%, the current valuation is compelling.