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Informist, Wednesday, Nov. 6, 2024

By Steffy Maria Paul

MUMBAI – A high single-digit growth in volumes and improved consumer sentiment are expected to drive growth in Page Industries Ltd.'s earnings for the September quarter. The manufacturer and seller of the Jockey and Speedo brands in India is expected to post a net profit of INR 1.66 billion for the September quarter, up 10.5% on year, according to an average of estimates from seven brokerages. The company is expected to post a revenue of INR 12.16 billion for the quarter, up 8.1% on year. Sequentially, the company's net profit is expected to remain flat, while its revenue is seen contracting 4.8%. 

The highest estimate for net profit is INR 1.76 billion by Emkay Global Financial Services and the lowest estimate is INR 1.62 billion by Centrum Broking. The highest estimate for revenue for the quarter is also by Emkay Global at INR 12.45 billion and the lowest is by Motilal Oswal Financial Services at INR 11.99 billion.

Higher profit after tax growth for the company during the quarter will be on account of higher other income and lower growth in depreciation and interest costs, Emkay Global said. The brokerage expects the company to report a 17% growth in net profit for the latest quarter. 

While Emkay Global expects volume growth and increased realisation to drive the company's revenue for the quarter, Kotak Institutional Equities sees pricing as having a minimal impact on revenue growth. Page Industries' revenue is seen up on a low base due to a slight recovery in the innerwear and athleisure categories, Axis Securities said. Centrum expects the company's revenue to grow on the back of improved consumer sentiment, new product launches, and marketing initiatives.

Page Industries' volume is expected to grow due to a low base effect and relatively lighter channel inventory, Emkay Global said. Among channels, online continues to see robust growth, followed by exclusive brand outlets, while multi-brand shops continue to see muted trends, the brokerage said. With lighter inventory and the launch of sub-INR 1,000 athleisure products, the men's innerwear and athleisure categories are seeing relatively better trends as compared with women's innerwear, Emkay Global said. Centrum expects the company's volumes to grow 7% on year as the company "company successfully navigated the complexities of mixed demand trends." 

Page Industries is expected to report earnings before interest, tax, depreciation, and amortisation of INR 2.48 billion for the latest quarter, according to the average of estimates from six brokerages. The EBITDA estimates range from INR 2.38 billion to INR 2.60 billion. 

Owing to some impact from higher sales of lower-priced stock-keeping units, Kotak expects the company to post a gross margin of 55.5% for the quarter, down 20 bps on year. This, coupled with higher other expenses, would take the company's EBITDA margin down 40 bps to 20.4%, the brokerage said. While Axis Securities sees the company's EBITDA margins remaining flat on higher operating expenditure, Motilal Oswal expects it to expand moderately.  

While the impact of the implementation of the automated replenishment system on primary sales is behind, demand remains weak, especially in the multi-brand outlets channel, Nuvama said. However, the automated replenishment system has worked well for categories with lower stock-keeping units like men’s innerwear, Motilal Oswal said. Investors should watch out for commentary on the recovery in rural demand and demand in kids' and women's athleisure categories, analysts said.

The innerwear and swimwear manufacturer will declare its Jul-Sept financial results on Thursday. On Wednesday, shares of Page Industries closed at INR 44,153.35 on the National Stock Exchange, up 1.8% from the previous close. 

Following are the Jul-Sept earnings estimates of Page Industries based on reports from seven brokerage houses:

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Edited by Saji George Titus

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