Shares of Page Industries, which licenses products of innerwear and loungewear brand Jockey International in India, gained nearly 2% in Friday's trade after investors cheered the firm's second interim dividend announcement despite a weak set of second-quarter numbers.

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At 1:52 pm, the scrip was trading 1.36% higher at ₹38,198.90 apiece on the NSE. However, the stock has not done particularly well in recent times. Even though the large cap stock has logged 56% returns during the last three years, its share price has fallen 22% in the last one year and lost 9% since the beginning of this year.

Page Industries market capitalisation stood at ₹42,593 crore on Friday.

Despite posting weak quarterly earnings, global brokerage firm Morgan Stanley has an 'Overweight' rating on the counter, with a target price of ₹44,738. Morgan Stanley believes the festive season is expected to potentially catalyse a turnaround in sales. "The management is confident that the current phase is transitory and would improve going ahead,” it said.

Macquarie, meanwhile, assigned an 'Underperform' call with a target of ₹31,000 a share. "This, we believe, cannot be offset by cost-control measures as peers have raised discounting levels. The focus, thus, remains on cost control initiatives that will be taken by the company to sustain required brand investments."

Analysts at domestic brokerage house Emkay Global upgraded their rating on the counter to 'Hold' with a target price of ₹39,000 per share. The brokerage said the stock has lagged benchmark indices by 30% in the last one year.

Page's in-line second-quarter results were a combination of a 5-9% revenue miss and a 160-180 basis points margin beat, on lower marketing spend, hiring freeze and an accounting change. Volume decline persisted, with 9% and 11% de-growth in Q2 and H1, while the economy-segment players — Lux, Rupa, Dollar — saw a 10-20% volume growth in the first half of this fiscal, albeit lackluster revenue growth on pricing cuts.

Headwinds—in the form of weak demand trends, inventory-laden peers (unusually high schemes to the trade) and senior-level CRO and COO exits—are unrelenting and may keep near-term growth in check, Emkay said in its note.

While there is no change in FY25 and FY26 estimates, the brokerage adopted a conservative stance, as some company-specific issues may stretch the recovery.

According to Centrum broking, the decline in volumes was on largely on account of muted demand environment and high base effect. "Keeping muted demand environment in context we have accordingly cut our EPS (earnings per share) estimates by 1% and 0.4% for FY24 and FY25," it said while maintaining an 'Add' rating on the stock. The brokerage, however, reduced its target price on the counter to ₹44,916 a share.

Dividend, Q2 earnings update

The large cap stock operating in apparels sector declared a dividend of ₹75 per equity share for financial year 2023-24. The record date for the same has been fixed as November 18. This means that shareholders of Page Industries who own the stock as of that date will be eligible for the dividend payout.

Payment of the dividend will be done on or before December 6 this year.

Besides, the company also announced its financial results for the September quarter. It reported a 10% drop in revenue to ₹1,255 crore, while net profit was down 7% from last year to ₹162.13 crore.

However, the gross profit margin for Page Industries remained intact at 55.8%, compared to 55.7% last year. For the June quarter, that figure stood at 52.9%.

Operating profit or EBITDA came in-line with expectations at ₹237.86 crore due to lower other and employee expenses.

The management has said the challenges in September quarter were transient and continued investment in technology would ensure healthy operating margin.

First Published:Nov 10, 2023 3:28 PM IST