Page Industries Ltd., the exclusive licensee of the Jockey brand in India, has reported a strong performance in its September quarter (Q2FY25), buoying investor confidence. The stock surged to a new 52-week high of ₹48,393.70 on Monday, reflecting a 5% increase since the results were announced on November 7th.
Key Highlights from Q2FY25:
- Revenue Growth: The company witnessed a return to double-digit revenue growth of around 11% year-on-year, driven by robust performance in the e-commerce channel, particularly quick-commerce.
- Volume Growth: Volumes increased by 6.6% year-on-year to 55.2 million pieces.
- Price and Mix: Average selling price (ASP) growth of 4% was primarily attributed to premiumization within categories, favourable category mix, and e-commerce channel acceleration. No price hikes are anticipated for the remainder of FY25.
- Margins: Aggressive cost control and easing raw material prices led to a multi-quarter high EBITDA margin of 22.6% in Q2FY25. The management maintained its margin guidance of 19-21% for FY25.
Outlook and Challenges:
While the festival season showed encouraging signs, the management remains cautious about a significant revival in consumer sentiment. Tier 2 and Tier 3 towns continue to outperform metros and Tier 1 cities, benefiting from a gradual uptick in rural consumption.
Channel inventory rationalisation remains a concern, but the management expects complete normalisation in the second half of FY25. However, the $1 billion revenue target for FY26 may be delayed due to sluggish demand.
Valuation and Future Prospects:
The stock’s rich valuation of 65 times FY26 estimated earnings raises concerns. To justify this valuation, sustaining the strong performance of Q2FY25 is crucial.
Page Industries’ increased focus on expanding distribution through multiple channels and smaller cities is expected to boost volumes and penetration. The company aims to add 150-160 new exclusive brand outlets (EBOs) by the end of FY25. However, muted demand and intense competition may pose challenges to near-term volume growth.
