Tuesday, July 12, 2016

Page Industries Struggles With High Expectations

Page Industries' stock closed today's trade below its key 30-day and 50-day moving averages, signalling a short-term downtrend.

However, the stock continued to trade well above its 150-day and 200-day moving averages, confirming the long-term uptrend.

Growth at India’s licensee for Jockey inner-wear has slowed from earlier highs, but the stock continues to be valued high due to the promise it holds.

Also, FY’16 earnings growth of nearly 19% remained reasonable if not up to Page Industries' earlier standards.

The slowdown is attributed to various factors, including a larger base of revenue, a larger base of branded market-share, and availability of imported Jockey products over certain e-commerce channels.

Page Industries stock has run up by 50 times from 2009, but due to the recent moderation in growth, it has not been able to surpass its all-time high of nearly Rs. 17,000 achieved in May 2015.

Continuous reduction of promoter stake to even slightly less than 50% has also been a concern, though it was executed with full disclosures.

On the valuation front, Page Industries is richly rated, trading at 64 times price-earnings multiple on trailing twelve months basis.

However, the company scores high in core metrics like Respect for Equity, Return on Equity, Return on Capital Employed, Low Debt / Equity, and Dividend Yield.

The Page counter has been struggling with high expectations from the high performance of earlier years.

Going forward, the fortunes of Page will be determined by how well it can grow its additional licensed markets for Jockey like UAE.

Market will also be watching how well it can compete with other imported inner-wear brands now available in India, and also on how quickly it can scale up its second brand of Speedo swimwear.

Page Industries' Annual General Meeting (AGM) is scheduled for August 11th.

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