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Stock Review: Page Industries

 

In the past two months, the stock of Bangalore-based Page Industries, which is into manufacturing and distribution of innerwear and casual wear for men and women, has attracted continued investor interest. The company's stock has earned around 14% returns against the 8% gains in the benchmark Sensex.

A major positive development for the company is the extension of its licence period to manufacture and distribute the premium innerwear brand Jockey till 2030. It sells the branded products in India, Sri Lanka, Nepal, Bangladesh. It has recently entered United Arab Emirates (UAE).


The innerwear market is estimated to be . 14,000 crore. Page Industries has a market share of 24% in the men's category and 12% in the women's innerwear market. A strong presence in the premium category, which has an average market price between . 100 and . 150 per piece, gives an edge to Page over its peers. Despite a bigger distribution network that spans across 22,000 retail outlets, the company has a relatively lower working capital cycle of around 60 days.


In the coming quarters, the company plans to foray into clothing for lei-sure and gym and kids' innerwear segment. This could emerge as a new growth driver for the company considering the fact that the Jockey International has wide range of products in kids' segment. Also, the present licence with Jockey International also allows Page Industries to manufacture and distribute kids' innerwear. Developing a strong brand in this segment would be lucrative and easier for the company than increasing the presence of its premium brand Jockey in tier-II and tier-III cities. This has more to do with the perception of its brand being premium and presence of well-penetrated players like TT and other local players in tier-I and tier-II cities. At present, the innerwear men's segment contributes around 63% to the company's topline followed by lounge and casual wear 21% and women innerwear 16%. In the past seven months, Page's stock has shot up by over 43% thereby increasing its valuation to a trailing 12-month P/E of 34.6 from 31. The P/E of its closest peer Maxwell Industries has increased by 19 to 22 during the said period. A sharper jump in valuations seems to fully take into account the future growth potential. Therefore, a room for further stock appreciation looks limited.

 

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