Motilal Oswal upgrades Page Industries stock to 'buy' after Q2 results, predicts 20% upside
Page Industries reported a 30% YoY rise in Q2 net profit to Rs 195.3 crore and 11% sales growth, beating estimates. Motilal Oswal upgraded the stock to 'buy' with a target of Rs 54,000, citing strong demand and e-commerce growth.
By ETMarkets.com |
ETMarkets.com
Page Industries posted a Q2 net profit of Rs 195.3 crore, a jump of 30% YoY, which led to domestic brokerage firm Motilal Oswal upgrading the stock’s rating to ‘buy’ with a target price of Rs 54,000, indicating an upside potential of 20% over Thursday’s closing price.
Page Industries (PAGE) reported sales growth of 11% in 2QFY25 (estimate of 7% and 4% in 1Q), with healthy 7% YoY volume growth (estimate of 3.5% vs 3% in 1Q) to 55m.
“Demand improved sequentially, but a full recovery would be visible in 2HFY25. Demand uptick during the festive season has helped to further liquidate trade inventory by 3 days. The implementation of ARS system has been driving inventory efficiency for distributors, resulting in better secondary order fulfilment,” said Motilal Oswal in its report.
The domestic brokerage firm expects demand improvement to continue in 2HFY25and a CAGR of 13%/17%/19% in sales/EBITDA/PAT over FY24-27E. With PAGE’s strong execution history and a large market opportunity, an uptick in the earnings cycle is expected and the valuation will also likely see a quick re-rating.
E-commerce channel also continues to outpace overall brand growth, mainly led by quick commerce. In the first half of FY25, e-commerce growth was 41%.
“The stock has underperformed massively for the last two years (down 15%) owing to weak volume growth. With volume growth pressure bottoming out and benign input costs likely to lead to a better margin print, we expect the earnings cycle to pick up from hereon. We believe the valuation will remain rich, as we can find only a few consumer stocks with comfort on both growth and margin in the near term,” believes the domestic brokerage firm.
Recent launches of new SKUs in the women’s and kids' categories, supported by a dedicated sales team, are likely to boost growth further while the Orissa facility is expected to start operations from 4QFY25, which will cater to a rising demand.
The shares of Page Industries were trading 6.5% higher at Rs 48,046.85 on the BSE around 2:20 pm today.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Page Industries (PAGE) reported sales growth of 11% in 2QFY25 (estimate of 7% and 4% in 1Q), with healthy 7% YoY volume growth (estimate of 3.5% vs 3% in 1Q) to 55m.
“Demand improved sequentially, but a full recovery would be visible in 2HFY25. Demand uptick during the festive season has helped to further liquidate trade inventory by 3 days. The implementation of ARS system has been driving inventory efficiency for distributors, resulting in better secondary order fulfilment,” said Motilal Oswal in its report.
The domestic brokerage firm expects demand improvement to continue in 2HFY25and a CAGR of 13%/17%/19% in sales/EBITDA/PAT over FY24-27E. With PAGE’s strong execution history and a large market opportunity, an uptick in the earnings cycle is expected and the valuation will also likely see a quick re-rating.
E-commerce channel also continues to outpace overall brand growth, mainly led by quick commerce. In the first half of FY25, e-commerce growth was 41%.
“The stock has underperformed massively for the last two years (down 15%) owing to weak volume growth. With volume growth pressure bottoming out and benign input costs likely to lead to a better margin print, we expect the earnings cycle to pick up from hereon. We believe the valuation will remain rich, as we can find only a few consumer stocks with comfort on both growth and margin in the near term,” believes the domestic brokerage firm.
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Recent launches of new SKUs in the women’s and kids' categories, supported by a dedicated sales team, are likely to boost growth further while the Orissa facility is expected to start operations from 4QFY25, which will cater to a rising demand.
The shares of Page Industries were trading 6.5% higher at Rs 48,046.85 on the BSE around 2:20 pm today.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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