Markets
Page recovers in Q1, but concerns remain amid weak demand
Summary
In Q1, Page added 43 exclusive brand outlets to its network, taking the total count to 1,332 as of June-end.After a miserable March quarter (Q4FY23), Page Industries Ltd has seen notable improvement in key measures in Q1FY24. Ebitda margin rebounded from multi-quarter lows seen in Q4FY23 to 19.5% in Q1 even as it has contracted year-on-year by 270 basis points. Note that Q1 Ebitda margin is within the company’s comfort level of 19-21%, which it plans to maintain.
Recall that one reason that had weighed on the March quarter results was that the implementation of auto replenishment system was taking longer. This time around, the company has said the auto replenishment system process is making progress. The complete adoption & transformation to a pull-based process will require some time, said the Q1 investor presentation.
But Page’s main problem continues to be the sluggish demand. Amid this, after three consecutive quarters of sequential drop, revenue rose in Q1 by 28%. This is encouraging, although year-on-year, Page’s revenue is down by 7.5% to ₹1,240 crore. Sales volumes, too, reflect the same trend. The athleisure category continues to face weak demand while the men’s premium category is performing well.
In the earnings call, Page’s management said it saw volumes improving in the last few weeks. But it is still early days and the festival season needs to be keenly watched, said the management. The company sees muted performance of athleisure as short term in nature and expects demand to pick up.
In Q1, Page added 43 exclusive brand outlets to its network, taking the total count to 1,332 as of June-end.
For now, Page does not see a need for price intervention. Amid subdued demand, this would weigh on revenue for FY24. Akhil Parekh, senior vice president at Centrum Broking, said, “Page’s FY24 outlook is challenging. The company’s revenues are likely to be flat year-on-year after a decent FY23." Page’s revenues had increased by 23% in FY23.
Investors seem to be taking note. Shares of Page have not recovered fully from the steep fall of 9% seen the next day after Q4FY23 results. The stock is down by 26% from its 52-week highs of ₹54,349.10 apiece seen in October even as it was up 3% on Thursday post Q1 results. There is little respite on the valuation front. According to Bloomberg, Page’s shares trade at 54 times estimated earnings for FY25. “While Page has beaten profit estimates in Q1, channel checks in July indicate sales are subdued. Amid this, valuations of the stock appear expensive," says Parekh.
