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Page Industries Ltd: research report by ICICI Securities
Riding on Indian consumption wave…
We met the management of Page Industries (Page) to understand the
company’s business model and get a sense about the company’s future
plans. Page, the sole licensee of Jockey International Inc (US),
manufactures and markets the Jockey brand of innerwear and
leisurewear for men and women in India, Bangladesh, Sri Lanka, Nepal,
Maldives and the UAE. The company has a licensing agreement with
Jockey till December 2030. Page has a widespread distribution network
of over 16,000 retail outlets in 1,100 cities and towns.
Strong domestic demand
The company operates at ~80% capacity utilisation levels and is still
catering only to Indian markets. In FY10, a mere 0.3% of the company’s
revenues came from the export markets. Domestic demand is fairly
strong and the company still has further scope for growth as the
opportunities in the overseas markets remain untapped.
Long-term association with Jockey
Page was the exclusive licensee for Jockey for a five-year period ending
CY10. The same has now been extended to 2030. An exclusivity period of
20 years for marketing products of a well renowned brand provides good
earnings visibility for Page.
Strong topline, bottomline growth
During FY08-10, Page witnessed strong growth of 33% and 29% CAGR in
topline and bottomline, respectively. Going forward also, the company is
expecting to sustain this kind of growth.
Healthy return ratios and shareholder rewarding company
Page enjoys RoE and RoCE in the range of ~40%. The company also has
a policy of paying ~50% of its earnings as dividend.
View
Page Industries is a play on the Indian consumption story. We believe that
while demand continues to roll in, it will need to scale up capacities to
cater to this demand.
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