What a blood bath we have seen in the Page industries last week. It’s terrible! The stock almost lost 10% in a single day after announcing poor Q4 results. Well, the results might be a short-term cause due to the rise in the commodity prices, the actual gain of the stock is way ahead. So let’s deep dive into the company’s
What countered the stock price last week – On 25th May 2023, Page Industries announced their Q4 results where
- The profit was blown 59% YoY to 79 crores.
- Revenue was also down by 13% to 969 crores vs 1,111 crores for the corresponding last quarter.
- EBITA was also down by 30% QoQ
These are the bullet things that made the shares plunge to 10% in a single day. Well, this news is only concerned with the corresponding quarter. But let’s look at what lies ahead for Pade Industries in the future.
Industry – Page Industries belongs to the textile industry which has an exclusive license JOCKEY International Inc. The company’s main business objective is to manufacture, distribute, and marketing of the JOCKEY brand in India, Sri Lanka, Bangladesh, Nepal, and the UAE. Page Industries also has Speedo International Ltd. for the manufacturing, marketing, and distribution of the Speedo brand in India.
Well, let’s look at the industry growth and the main competitors.
The textile industry is one of the oldest and largest industries in India. The industry contains different sub-sectors like hand-spun and hand-woven textiles, yarns, natural fibers, and many more. The textile is expected to grow at 10% CAGR from 2019-20 to reach US$ 190 billion by 2025-26. And also India is the world’s latest producer of cotton.
So the industry is ever-growing and need not worry unless
- Damaged corp
- Crop rotation
- Commodity prices
Now if we look at the Page industries, the company produces products under two main brands.
- Jockey – Under the jockey brand the product portfolio includes underwear, handkerchiefs, caps, towels, etc
- Speedo – speedo brand includes swimwear, equipment, footwear, etc
Business Analysis of Page Industries
Analyzing the company’s performance in examining and evaluating its financial health, performance, and potential for future growth.
Let’s look at the revenue figures from 2018 to 2022.
- In 2018, the company had revenue of 2,551 cr
- In 2019, the company had revenue of 2,852 cr
- In 2020, the revenue jumped to 2,954 cr
- In 2021, the revenue is 2,933 cr
- Whereas in 2022, the revenue surged to 4,020
So, if you observe the revenue of the company in the last future, there is significant growth every year. The adjusted EPS is also increasing significantly higher in every quarter.
The ROCE of the company is at 75.23% and the ROE is at 54.37 % which is exceptionally high compared to other companies in its segment.
Then why did the share lose in Q4? Well, the clear answer is the increase in the cotton process.
See people, if the raw materials costs increases, then certainly the end price will also do so. But in the case of Jockey, it’s not the same case. They have resisted increasing the price of their products, but in turn, they halted their production line and reduced the volume. So the revenue had a huge impact.
Page industry’s current share price
Page Industries is definitely a good buy from the long-term perspective. The company has an added advantage in the retail consumer segment. JOCKEY has strong brand recognition in the market which is a high advantage to the company to capture the high-spending underwear segment.
Page Industries is a textile company that has an exclusive license of Jockey and Speedo in manufacturing, distributing, and selling. Due to the increase in cotton prices, the share fell almost 10% in a single day.
The current share price of Page Industries is 37,775.65. The major reason for the high price is the share has not undergone any stock split till now. The face value of the share has also not decreased.