Page Industries - Q4FY20 Result Update - ICICI Securities

With volume growth tapering to mere 1% in 9MFY20, disruptions owing to Covid-19 further added woes in an already challenging FY20. Q4FY20 results were below estimates owing to material volume decline. Revenue in Q4 de-grew 11% YoY (vs. estimate of 7.2% de-growth) to Rs. 541.3 crore mainly owing to volumes declining 18.7% to ~30 million (mn) pieces. Page was unable to execute confirmed orders worth Rs. 90 crore. Gross margins fell 476 bps YoY to 58.8%. We believe higher share of outsourced goods would have led to significant gross margin contraction. Owing to negative operating leverage, EBITDA margins fell sharply by 1100 bps YoY to 8.7% (I-direct estimate: 13.0%). Absolute EBITDA de-grew 61% YoY to Rs. 46.9 crore (adjusted for Ind-AS 116). PAT fell 59% YoY to Rs. 31.0 crore (tax rate: 28% vs. 35%). Page continues to have a healthy balance sheet that would enable it to tide over challenging scenario better than peers. Furthermore, management commentary was upbeat post lockdown relaxations.

Valuation & Outlook

Despite a challenging FY20, better working capital management translated to NWC days coming down by 10 days to 86. Subsequently, Page generated healthy operating cash flows worth ~Rs. 500 crore (vs. Rs. 225 crore). It continues to be virtually debt free with cash balance worth Rs. 117 crore as on FY20. We revise our earnings estimates marginally upwards sighting faster-than-expected normalcy. New initiatives, robust balance sheet would enable Page to navigate through a tough macro environment. We maintain HOLD rating on the stock with a revised target price of Rs. 21400 (52.0x FY22E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Page_Q4FY20.pdf

Shares of PAGE INDUSTRIES LTD. was last trading in BSE at Rs.20929.95 as compared to the previous close of Rs. 19169.5. The total number of shares traded during the day was 7242 in over 3145 trades.

The stock hit an intraday high of Rs. 21176.65 and intraday low of 18999. The net turnover during the day was Rs. 149191380.

Source : Equity Bulls

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