Page Industries

Page Industries, a textile player, has sailed through the storms faced by the textile industry rather well, posting healthy quarterly and annual growth in sales and profits. Page operates in a niche segment, its products hold brand recall and it has a wide-reaching and diversified presence, aiding sales growth. Low debt, strong and sustained margins, and good dividend payouts are positives. At Rs 715, the stock trades at about 22.6 times trailing twelve month per-share earnings. Although it lacks directly comparable peers, the stock is at a premium. Investors with moderate return expectations may accumulate the stock on price dips.

Branded play

Page is the exclusive Indian licensee of the US-based leisure and innerwear brand Jockey. The brand has strong recall for men and women; together with a mid-to-premium pricing range, it bodes well for the company. Page has a market share of about 20 per cent of the mid- and premium segment and the technological and design support of its overseas parent.

Page has also secured the licence to manufacture and market the Jockey line in Sri Lanka, Bangladesh, Nepal and West Asia. Exports, however, hardly account for revenue share, and are not likely to contribute in the next few quarters. The company has an integrated manufacturing capacity, producing yarn, outsourcing fabric production, and converting fabric to garments in its facilities. It has expanded capacity steadily to meet growing sales with garment facilities expanding from 56 million pieces to 74 million in FY09. Further step-up in production and increase in finished goods warehouse space will be undertaken this financial year.

Product play

Page produces and markets its products across several price points, ensuring a higher share of purchases besides mitigating risks of product concentration. Product lines span a wide range of innerwear, leisure wear, sportswear and thermal wear for men and women.

Page has a firm footing in the mid-priced value-for-money segment, as well as a presence in the premium range, thereby marking a presence across price points. Women's innerwear accounts for about 15 per cent of revenues, with 17 per cent stemming from leisure wear. Menswear dominates revenues with the balance.

Products are sold through multi-brand outlets such as Lifestyle, Central and Shoppers' Stop and smaller hosiery stores besides about 50 exclusive outlets. In stores such as Shoppers' Stop and Reliance, the brand has about 50 per cent of the market share.

The company has a far-reaching sales network, scaling up to its current presence in about 16,000 outlets from the 14,000 two years ago. Its exclusive store count has reached 50, with an addition of 13 stores in FY09 and seven stores in the first half of FY10.

The company aims at reaching a store count of 100 by the end of FY11. A low debt-equity of 0.48 times augurs well for the company's ability to fund such growth.

Competition stems from other mid and premium brands such as VIP, Enamor, Rupa, Chromosome and so on; with foreign brands as well finding the Indian market attractive, Page may have to cede market share.

Strong and steady

Given the need-based and non-discretionary nature of its product line, Page has managed healthy 30 per cent growth in the past slowdown-hit year.

Over a three-year period, Page clocked a compounded annual growth rate of 35 per cent while net profits staged a 40 per cent growth. Page also has healthy margins; operating margins for FY 09 stand at 22.4 per cent, up two percentage points from the year before.

With low debt, it is not interest costs but depreciation that left net margins at 12.2 per cent for FY09. Even so, margins are quite healthy, and have hovered around 12 per cent for the past three years.

The first half of this year saw sales jump 28 per cent, though higher employee and other expenses caused a slight fall in operating margins to 21.9 per cent. Net margins, on the other hand, showed a slight improvement to 12.4 per cent.

The company has paid out dividends of at least 100 per cent every year since its IPO, declaring three interim dividends besides a final dividend in FY09.

via BL