Page Industries’ Shares Tumble  After Weak Q4 Results
Jockey-maker Page Industries’ Q4 results were a big miss with lack of clarity on recovery which led to a sharp cut in earnings. (Photographer: Dhiraj Singh/Bloomberg)

Page Industries’ Shares Tumble After Weak Q4 Results

Shares of Page Industries Ltd. fell the most in more than a decade as the maker of Jockey underwear and Speedo swimwear reported lower-than-expected quarterly earnings.

The company’s profit tumbled 20 percent year-on-year to Rs 75 crore in the quarter ended March, according to its filings. The average of analyst estimates tracked by Bloomberg suggested a profit of Rs 108 crore. The management attributed the weak performance to a slowdown in the Indian economy.

That prompted Credit Suisse to downgrade Page Industries to ‘underperform’ from ‘neutral’. “The slump in growth rate in the fourth quarter is very concerning as it comes on a relatively weak base and points to further deterioration of an already weak trend,” the brokerage said in a note. “The management has not yet seen a pick-up in the first quarter of the ongoing financial year, it said.

Credit Suisse slashed the target price by 19 percent to Rs 18,700 after lowering Page Industries estimates for 2019-20 and 2020-21 by 9-11 percent.

The stock tumbled as much as 13.38 percent in intraday trade. It closed 10.43 percent lower, the biggest fall since since October 2008, at Rs 19678.50 apiece. The consensus target price of analysts tracked by Bloomberg is Rs 22,446.

Page Industries’ Q4 results were a big miss with lack of clarity on recovery which led to a sharp cut in earnings, said Motilal Oswal, which maintains a ‘neutral’ rating with a target price of Rs 19,740. The poor earnings can be attributed to incomplete recovery in off-take after goods and services tax and credible threat of competition for the first time in the form of Van Heusen, it said.

Ambit Capital also blamed competition and gaps in product offerings for the earnings slowdown. Not expecting a turnaround anytime soon, the brokerage lowered the target price to from Rs 20,000 apiece to Rs 18,000.

Kotak Securities, however, remains optimistic. The brokerage upgraded its rating to ‘reduce’ from ‘sell’ with revised discounted cash-flow based valuation at Rs 21,300 per share.

While Kotak Securities acknowledged that Q4 was the weakest quarter ever for Page Industries with a revenue and volume growth of 1 percent, the brokerage said the management blamed liquidity issues for the slowdown.

Page Industries remains a good medium- to long-term play and the stock could well be on its way to more palatable valuations, it said, adding that the stock isn’t there yet.

But Kotak Securities was critical of the management, which in an earnings call cited a one-off in the base quarter as the reason for weak earnings. “We find it amusing that even a company like Page would choose to highlight past one-offs for the first time to explain a weak current print. We expect the company to disclose the ‘accretive 4QFY18 one-offs’ in 4QFY18 itself.”

Page Industries is yet to respond to BloombergQuint’s emailed queries on Kotak Securities’ report.

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