A shopper walks past an advertisement for Jockey International Global Inc. underwear at a Big Bazaar hypermarket. (Photographer: Dhiraj Singh/Bloomberg)

Why Page Industries’ Shares Fell Despite Beating Earnings Estimates 

Shares of Page Industries Ltd. slumped as much as 8.86 percent, the most in nearly five months, despite beating earnings estimates as Kotak Securities Ltd. said the company’s revenue was aided by adoption of new accounting standards.

Profit rose 23 percent year-on-year to Rs 102 crore in three months ended December, the licensed maker of Jockey and Speedo apparel in India and Sri Lanka said in an exchange filing. That compares with the Rs 98.3 crore consensus estimate of analysts tracked by Bloomberg.

Revenue increased 19 percent to Rs 738 crore against the estimated Rs 717 crore.

The move to Ind-AS 115 accounting standards resulted in revenue accretion of Rs 33 crore in the third quarter, Kotak Securities said in a note. That led to an additional profit before tax of Rs 12.4 crore during the period. Adjusted for the change in accounting standards, the brokerage said the revenue was below estimates and operating income and profit after tax were just about in line.

Page Industries reported a volume growth of 12 percent year-on-year. Kotak Securities, however, said that adjusted for the change in accounting, volumes rose 8 percent.

The company’s decision to discontinue segment disclosures limit analysts’ ability to track its progress on some micro markers, according to the brokerage.

Kotak Securities cut earnings estimates for Page Industries by 3-4 percent for the years ending March 2019 and March 2020. It maintained a ‘Sell’ rating on the stock with a target price of Rs 22,300 apiece—lower than Thursday’s close of Rs 23,990.

Of the 15 brokerages that track Page Industries, only Kotak Securities and two others have ‘Sell’ ratings. Six have ‘Buy’ ratings on the stock, while the remaining six have 'Hold’ ratings. The consensus 12-month price target on the stock is Rs 25,638, 16 percent higher than the current market price, according to data available on Bloomberg.