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ICICI Direct Report
Disruptions owing to the pandemic weighed significantly on the Q1 FY21 performance of Page Industries Ltd. as two-thirds of the quarter was a washout.
Store closures, supply-side challenges translated to volume de-growth of 69% YoY to approximately 15 million pieces in Q1 FY21.
Material presence in metro cities (approximately 60%) further hampered operations due to stringent measures by local authorities.
The management indicated that green shoots were visible with strong demand for outerwear segment (athleisure) post relaxation in lockdown.
Subsequently, average selling price grew 12% YoY in Q1 FY21. Also, channel inventory has been on a declining trend indicating strong pent up demand (secondary sales higher by 18-20% than reported Q1 FY21 number).
Overall revenues for quarter de-grew 65.9% YoY to Rs 284.8 crore. Reported gross margins fell 696 basis points YoY to 48.1% on the back of inventory provisioning of Rs 10.7 crore.
Gross margins (including sub-contacting charges) were at 23% versus 39% YoY owing to lower absorption of labour charges.
The company significantly rationalised overheads with other expenses down 66.3% YoY to Rs 48.8 crore (mainly cut in marketing spends).
Employee expenses de-grew 4.3% YoY to Rs 122.9 crore. Subsequently, it reported Ebitda, profit after tax loss of Rs 34.7 crore, Rs 39.6 crore, respectively (tax credit: Rs 12.8 crore).
Page Industries continues to have a healthy balance sheet that would enable it to tide over challenging scenario better than peers.
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