Neutral on Page Industries, target price Rs 20,000: Motilal Oswal

Motilal Oswal has given a neutral rating to Page Industries with a target price of Rs 20,000. The share price moved down by 1.41 per cent from its previous close of Rs 19,145.35. The stock’s last traded price is Rs 18,874.50.

Page Industries Ltd., incorporated in the year 1994, is a Large Cap company (having a market cap of Rs 20991.65 Crore) operating in Apparels sector.

Financials
For the quarter ended 30-06-2020, the company reported a Standalone sales of Rs 284.80 Crore, down 47.38 % from last quarter Sales of Rs 541.26 Crore and down -65.89 % from last year same quarter Sales of Rs 834.96 Crore. The Company reported net profit after tax of Rs -39.55 Crore in latest quarter.

Investment Rationale
While there is an upward revision in sales on faster-than-expected recovery, there is actually a ~10% reduction in EBITDA and PAT in FY21 due to unexpected loss in 1QFY21. FY22 EPS estimates have been raised by 6%. PAG has an immensely impressive earnings growth track record. Its recent efforts on balance sheet improvement are commendable. Also, management endeavors to improve channel efficiency and revitalize growth are likely to eventually turn fruitful. However, the path to earnings recovery is unclear. EPS growth has been flat for the past two years. Category slowdown and competitive headwinds present other significant near-term challenges. The stock is trading at 47.6x FY22E EPS. The brokerage values the company at 45x Sep'22E EPS to arrive at TP of INR 20,000.

Promoter/FII Holdings
Promoters held 48.3 per cent stake in the company as of Jun 30, 2020, while FIIs held 25.5 per cent, DIIs 14.1 and public and others 12.1 per cent.