Page Industries: Emkay Global Maintains REDUCE Rating Amidst Sub-Par Growth Trends

Emkay Global Financial has issued a research report on Page Industries, retaining its 'REDUCE' rating for the stock and setting a target price of Rs 39,450 for the fiscal year ending September 2026. The report points to continued sub-par growth trends, with the company experiencing only 3-4% growth in the second quarter (Q2) and the first half of the fiscal year. Management attributes this sluggishness to weak macroeconomic factors but assured that market share loss is nil, based on feedback from modern trade channels and retention of shelf space.

The company has largely overcome growth impacts related to ARS mismatch. New innovations have shown promise, with the JKY Groove line performing better than expected and healthy sell-throughs for recently launched bonded tech innerwear.

Financially, Page Industries' EBITDA margin saw a decline of 90 basis points to 21.7% in Q2, primarily due to wage hikes, increased employee hiring, and higher marketing expenditure. However, the gross margin improved significantly by approximately 350 basis points to around 60%.

Channel performance shows that E-commerce continues to lead growth, while physical channels like Exclusive Brand Outlets (EBOs) and Multi-Brand Outlets (MBOs) are experiencing muted Like-for-Like (LFL) trends.

Impact

This 'REDUCE' rating suggests that analysts at Emkay Global Financial do not expect significant upside in Page Industries' stock price in the near to medium term. Investors will closely monitor the company's ability to revitalize growth, particularly through the General Trade (GT) channel, which holds high salience. The performance and ramp-up of new product launches will also be crucial indicators. The miss in Q2 EBITDA and revenue estimates compared to street expectations could weigh on investor sentiment, leading to potential underperformance of the stock. Rating: 7/10

Difficult Terms:

• Emkay Global Financial: A financial services company that provides research and analysis on companies and stock markets.
• Page Industries (PAG): The Indian manufacturer and distributor of Jockey innerwear and other apparel brands.
• REDUCE Rating: An investment recommendation indicating that analysts believe the stock is unlikely to provide substantial returns and may even decline.
• Sep-26E TP (September 2026 Target Price): The estimated future price of the stock by September 2026, set by the analyst.
• Q2 (Second Quarter): The financial quarter typically spanning April to June.
• H1 (First Half): The first six months of the fiscal year.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization; a measure of a company's operating profitability.
• EBITDA Margin: EBITDA divided by revenue, indicating profitability as a percentage of sales.
• Gross Margin: Revenue minus the cost of goods sold, expressed as a percentage of revenue; shows profitability before operating expenses.
• ARS mismatch: Potentially refers to an accounting or systems mismatch, such as in Accounts Receivable or Asset-Liability Systems, impacting financial reporting. The report indicates this issue is largely resolved.
• JKY Groove, Bonded tech innerwear: Specific product lines launched by Page Industries.
• E-com (E-commerce): Sales conducted online.
• EBO (Exclusive Brand Outlet): A retail store owned and operated by the brand itself.
• MBO (Multi-Brand Outlet): A retail store selling products from various brands.
• LFL (Like-for-Like) Trends: Compares sales performance of stores open for at least a year to track organic growth.
• GT Channel (General Trade Channel): Refers to traditional retail outlets and distributors, distinct from modern trade or e-commerce.
• P/E (Price-to-Earnings) Ratio: A valuation metric comparing a company's stock price to its earnings per share. '45x P/E' means investors are willing to pay 45 times the company's annual earnings for its stock.