Page Industries, also known as Jockey India, is a publicly listed company which is the licensee of Jockey International and Speedo in India and Sri Lanka.

Stock Performance of Page Industries

The price of Page Industries Share has come down from close to Rs. 22,070 on 24th May 2019 to around Rs. 19,390 on 30th May 2019. The Page Industries share is down by almost 45% from its 52-week high.

Page Industries Q4 Results

The Q4FY19 results of Page Industries were disappointing. Hence, the market has also acted accordingly.

  • The YoY sales growth was flat. Sales numbers in Q4FY19 were Rs. 608 Cr, which were also the same in Q4FY18, that is Rs. 608 Cr.
  • The volume growth was 1.1% in Q4FY19 which also almost flat. And it was hardly 5.6% in FY19.

The sluggish sales and volume growth numbers have had impact on the profitability which too hasn’t improved.

  • The major reason behind the disappointing numbers of Page Industries and its profit decreasing is its EBITDA Margins. The EBIDTA margins have come down from 24.1% in last year’s same quarter to 19.7% in this quarter (Q4), that is down by 4.4%. The management stated that the EBITDA Margins have fallen because of higher staff expenses.

A one-time correction was expected in their staff expenses which the company has done in this quarter. The company has also acquired new staff to compliment the increased focus on kids wear. The company has hired around 100 new employees, sales executives particularly.

The company has said that they will improve the current EBITDA margins and take them up till 22% in the coming quarters. So, this can be considered as positive sign, because as the EBITDA Margins improve the profitability of the company will also improve.

Reason behind the Slowdown

In the con-call conducted by the company, the management explained the following reason behind the slowdown in the company’s performance and numbers: –

  • Economy at the micro level is not doing so good.
  • The company is also facing some GST issues. As a result of the new GST rules, the dealers of the company do not keep extra inventory with them because of the accounting compliance. So, the dealers request inventory from the company as and when they require it.

But all these will get stabilized in the coming times from both company as well as industry perspective.

The slow consumption can also be attributed to the disposable income in hand with the customers. As this company deals in premium segment, if the customer doesn’t have disposable income in their hand then the buying decision may be postponed or changed to other brand or different segment altogether. But the positive thing to note is that, the penetration of the premium segment is being calculated to grow in the coming times.

Few Statistics about Page Industries & the industry

  • Jockey is a premium brand. And the market of such premium markets is experiencing double digit growths.
  • Jockey Market Penetration: –
    • In the men’s premium innerwear market Jockey has a penetration of 19%-20%. They are the market leaders in this category.
    • Where as in women’s innerwear, they have a penetration of only 5%-6%.
    • And in outerwear & Athleisure a market penetration of 6%-8% has been acquired by Jockey.

The company is still has a lot of opportunity to grow. They have very minimal penetration in women’s innerwear which the company will definitely try to increase in the future. In case of outerwear and athleisure market, the company has also started giving increased focus towards this category.

Page Industries Sales Mix

Category Contribution in Sales
Men’s 50%
Women’s 16%
Athleisure 15%
Kid’s & Others 19%

Men’s innerwear contributes majorly to the sales of Page Industries.

The sales mix numbers show that women’s, athleisure & kid’s categories are still big opportunities for the company to explore and grow. The company has already started taking actions for the same.

PE Historical Performance

  PE
Current 56
3-Years Average 73
5-Years Average 63
10-Years Average 46

Currently, the Page Industries share is trading with a PE between its 5-years and 10-years average PE values.

Thus, the Page Industries share can be kept under radar for investment purposes at this point. A PE ratio of below 50 can make the stock look attractive.

Page Industries’ Future Outlook

  • Page Industries fits perfectly in a consumption story which makes it a very good long term investment prospect.
  • The company has the license to sell Jockey products till 2040. Thus, the company has very healthy earnings visibility.
  • The Indian markets are also growing every year. Premium innerwear markets is also growing in India.

Notes: –

  • The numbers that are used are approximate and have been rounded for presentation purposes.
  • We are not, in any way, saying that this is a bad company or that the stock of the company is bad.
  • We are also not suggesting anyone to immediately go and buy the stock or invest in the stock markets.
  • Only an analysis has been presented here. No judgments or final statements are being made here.