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http://content.icicidirect.com/mailimages/ICICIdirect_IndianInnerwearSector_InitiatingCoverage.pdf
R i d i n g t h e c o n s u m p t i o n b o o m …
Page Industries (Page), a dominant player in Indian branded innerwear
and leisurewear segment, is expected to be the key beneficiary of the
changing preference of the Indian consumer towards branded apparel
owing to favourable demographics like rising disposable income,
increased urbanisation and enhanced organised retail penetration.
Strong brand recall for its flagship brand ‘Jockey’ owing to its early
mover advantage provides it a competitive edge compared to other
international peers. With the Indian innerwear segment expected to
grow at a faster pace (CAGR of 13.2% over 2011-2020E) than the Indian
apparel industry (CAGR of 10.6% over 2011-2020E), Page appears well
poised to capitalise on the opportunity enabling consistent growth in
revenues and profitability.
Strong brand recall to enable leveraging of robust growth of innerwear industry
Over the last 15 years, since it began selling the Jockey brand in India,
Page Industries has invested in setting up a strong distribution network
and continuously spent on advertisement for building the brand image
and has virtually achieved a super brand status for the ‘Jockey’ brand.
The brand name ‘Jockey’ is synonymous with the image of premium and
super premium innerwear in the Indian customer’s mindset. Strong brand
recall and a substantial presence in the high growth premium and super
premium innerwear categories would enable Page Industries to capture
the vast growth opportunities available in the innerwear segment.
Fundamentals to remain on strong footing
We expect Page Industries to register a revenue and PAT CAGR of 31%
and 37% over FY11-FY14E to | 1100 crore and | 150.6 crore, respectively.
Strong revenue growth aided by EBITDA margin expansion of 230 bps
over FY11-14E to 20.7% would lead to robust growth in net profit and
lead to improvement in return ratios. We expect the RoCE to improve
from 33.7% in FY11 to 47% in FY14E.
Valuations
Page has always traded at rich multiples owing to the strong financials,
robust revenue growth (CAGR of over 30% despite higher base) and free
cash flow generation. Apart from the robust and consistent topline
growth, the company has also consistently rewarded its shareholders. We
have valued the stock at 23.0x FY14E EPS of | 135.1 to arrive at a target
price of | 3,016. We are initiating coverage on Page Industries with a BUY
rating. At the CMP, the stock is trading at 25.3x and 19.9x its FY13E and
FY14E EPS of | 106.2 and | 135.1, respectively.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_IndianInnerwearSector_InitiatingCoverage.pdf
R i d i n g t h e c o n s u m p t i o n b o o m …
Page Industries (Page), a dominant player in Indian branded innerwear
and leisurewear segment, is expected to be the key beneficiary of the
changing preference of the Indian consumer towards branded apparel
owing to favourable demographics like rising disposable income,
increased urbanisation and enhanced organised retail penetration.
Strong brand recall for its flagship brand ‘Jockey’ owing to its early
mover advantage provides it a competitive edge compared to other
international peers. With the Indian innerwear segment expected to
grow at a faster pace (CAGR of 13.2% over 2011-2020E) than the Indian
apparel industry (CAGR of 10.6% over 2011-2020E), Page appears well
poised to capitalise on the opportunity enabling consistent growth in
revenues and profitability.
Strong brand recall to enable leveraging of robust growth of innerwear industry
Over the last 15 years, since it began selling the Jockey brand in India,
Page Industries has invested in setting up a strong distribution network
and continuously spent on advertisement for building the brand image
and has virtually achieved a super brand status for the ‘Jockey’ brand.
The brand name ‘Jockey’ is synonymous with the image of premium and
super premium innerwear in the Indian customer’s mindset. Strong brand
recall and a substantial presence in the high growth premium and super
premium innerwear categories would enable Page Industries to capture
the vast growth opportunities available in the innerwear segment.
Fundamentals to remain on strong footing
We expect Page Industries to register a revenue and PAT CAGR of 31%
and 37% over FY11-FY14E to | 1100 crore and | 150.6 crore, respectively.
Strong revenue growth aided by EBITDA margin expansion of 230 bps
over FY11-14E to 20.7% would lead to robust growth in net profit and
lead to improvement in return ratios. We expect the RoCE to improve
from 33.7% in FY11 to 47% in FY14E.
Valuations
Page has always traded at rich multiples owing to the strong financials,
robust revenue growth (CAGR of over 30% despite higher base) and free
cash flow generation. Apart from the robust and consistent topline
growth, the company has also consistently rewarded its shareholders. We
have valued the stock at 23.0x FY14E EPS of | 135.1 to arrive at a target
price of | 3,016. We are initiating coverage on Page Industries with a BUY
rating. At the CMP, the stock is trading at 25.3x and 19.9x its FY13E and
FY14E EPS of | 106.2 and | 135.1, respectively.
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