Why Page Industries’ optimism needs a reality check
Page Industries Ltd. is aiming high. Despite achieving 5.6% volume growth in the first half of FY27 (H1FY27), it is targeting double-digit growth for the full year. The company expects sales to accelerate in H2, driven by festive demand and new launches across key categories. The management said its newly launched Disney and Marvel collections have received an encouraging response from consumers.
Page Industries manufactures, markets and distributes apparel brands such as Jockey and Speedo.
“Achieving the full-year double-digit volume growth guidance now requires around 14% volume growth in H2FY27, making the recovery fairly demanding,” said Systematix Shares and Stocks (India).
Page Industries’ optimism on volume growth is yet to reflect in its earnings performance. In the June quarter (Q1FY27), Page lost 3-4 billing days due to the implementation of its auto replenishment system, with a corresponding benefit expected in Q2. But that did not play out. While volumes grew in double digits in July and August, September sales were muted. The festive shift to Q3 deferred primary volumes, while product availability challenges in select categories led to lower fulfilment rates.
Page acknowledged supply-side constraints, with order fulfilment declining from its historical 98-99% levels to 96-97% in Q2. This led to an estimated 3-4% loss in primary orders, particularly in men’s innerwear and women’s outerwear. Volumes grew 5.5% in Q2, while revenue rose 11.5% year-on-year, aided by price hikes and premiumization.
Margin pressure
Raw material inflation pulled gross margin down 272 basis points (bps) year-on-year to 57.2%. The pressure was partially offset by a 2.5% price hike. Inflationary pressures have persisted, with the benefit of low-cost inventory exhausted in Q1. The management is open to another price increase, but its timing and quantum will depend on balancing margins with consumer affordability.
Ebitda margin declined 80 bps to 20.8% in Q2FY27, but remained within the guided range of 19-21%. That said, Page expects employee costs to increase. Manpower requirements are expected to rise in the second half of FY27 as its Odisha and KR Pet facilities ramp up. This could constrain Ebitda margin expansion unless input costs ease or the company takes further price hikes.
Competitive landscape
Competition across online and offline channels remained subdued in Q1 and Q2 compared with the past three years, the management said, although it witnessed elevated consumer offers and discounting in October-November. On distribution, Page expects store additions to pick up in H2FY27, targeting 8,000-10,000 additions in FY27.
Page has an extensive distribution network, strong brand value and a healthy balance sheet, but sustained volume growth is key to regaining investors’ confidence. From its 52-week high of ₹43,855, seen in July, the stock is down nearly 28%.
Systematix cautions that volume growth remains a key concern amid the disconnect between revenue growth and underlying volume momentum. In H1FY27, revenue grew 9.7%, while Ebitda grew just 2.6%.
Citing consecutive negative growth surprises, analysts at Emkay Global Financial Services have cut Page’s FY28 and FY29 earnings-per-share estimates by 8-9%. The stock trades at an unattractive FY28 price-to-earnings multiple of 38, according to Bloomberg data.