Initiating Coverage on Page Industries - Emkay

Reco: SELL
CMP: Rs 3311
Target Price: Rs 2849

Walking on a Tight Rope

- Jockey's growth story remains intact. Richer product mix, product launches and capacity ramp ups to drive 19% earnings CAGR over FY12-30E

- However, mix improvement from men's innerwear to women's & sportswear to increase working capital days by 48% over FY12-30E, while asset turns to be capped at 7x

- At crossroads - Free cash flow insufficient to maintain average payout of 55-60%. Page may have to increase debt to retain dividend payout 'OR' reduce payout ratio

- De-rating inevitable- Only timing depends on company action (payout reduction or maintenance). To pare Page's premium valuations despite strong growth. Initiate with a Sell

Source : Equity Bulls

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