Page Industries share price falls 8% post Q3 earnings


Page Industries stock price opened with a loss of 4.37% today and later fell almost 8% intraday in Friday’s trading session after the consumer durables & apparel maker posted disappointing numbers for the December quarter earnings.

The stock touched an intraday low of Rs 21,650, declining 7.98% against the previous close of Rs 23,528.45 on BSE.

Stock price of Page Industries trades higher than 200-day moving averages but lower than 5, 20, 50 and 100-day moving averages. Page Industries share price has eroded 6.36% value in one week, over 7% in one month and 7.20% in a year. As per market depth data, 47% buyers were bidding against 55% sellers offering the stock. Volume-wise, 0.08 lakh and lakh shares were trading on BSE and NSE.

The firm reported steady revenue growth of 8% in Q3, while its PAT fell 15% and EBITDA declined 16% YoY. EBITDA margin during the quarter under review was down 490 bps YoY to 17.5% on reported basis and down about 600 bps adjusted for (Indian Accounting Standards (IND AS) 116.

Page’s 3QFY20 earnings print was weak on most counts, said Kotak Institutional Equities in its report and added,” PBT declined 28% YoY and net profit declined 15% YoY, aided by reduction in corporate tax rate.”

As per the brokerage house, the company’s management indicated that raw material costs were broadly steady through the year. It also indicated that the demand environment continues to be weak and refrained from giving any guidance on growth and margins. The management added its plan to double the capacity to 52 crore pieces (from 26 core pieces) over the next 4-5 years is on track. The growth in premium products was higher than mass/popular products, it added. Moreover, company’s staff costs also increased on the back of fresh recruitment for sales, marketing and operations.

“We bake in 3Q disappointment into our model and moderate growth and margin assumption. This drives a 14-16% cut in our FY2020-22 ‘Earnings Per Share Estimate’ forecasts. Our Discounted Cash Flow (DCF)-based Future Value (FV) stands revised down to Rs 22,000 implying a 41X March 2022 Estimate Price-to-Earnings (PE) multiple,” said Kotak Institutional Equities in its research note and kept ‘REDUCE’ rating on the stock.

Emkay Global Financial Services in its report said that the company’s margins were affected by higher sales incentives, investments in digital and automation and lower fixed-cost absorption. It added the improvement in growth should drive margin recovery, although key risk for the firm is increasing competition from new players. Management attributed sluggish volumes to weak consumer demand, resulting in lower footfalls in stores, it further said.

“We maintain Hold with a revised target price of Rs 21,500, based on 40x FY22E EPS,” said Emkay Global in its equity report.

By Rupa Burman Roy

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