Page Industries surges 10% despite disappointing March quarter results

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Shares of inner-wear maker Page Industries rallied 10 per cent to Rs 21,086 on the BSE on Wednesday despite the company reporting a disappointing set of numbers for the quarter ended March 2020 (Q4FY20).

Revenue for the quarter de-grew 11 per cent year on year (y-o-y) at Rs 541 crore, owing mainly to volumes declining 18.7 per cent to 30 million pieces. Sharp volume impact in March was the result of retail outlets being temporarily shut on account of the nation-wide lockdown due to the Covid-19 outbreak.

The company's profit after tax (PAT) declined 58.6 per cent y-o-y to Rs 31 crore during the quarter. The lower absorption of costs invested in sales and marketing, people and technology contributed to the lower PAT, the company said.

Owing to negative operating leverage, EBITDA (earnings before interest, taxes, depreciation and amortization) margins contracted sharply by 900 bps y-o-y to 10.7 per cent from 19.7 per cent in the year-ago quarter.

However, despite a challenging financial year 2019-20 (FY20), the company generated healthy cash flow from operation worth Rs 517 crore, up 125 per cent over FY19. It continues to be virtually debt free having cash balance worth Rs 117 crore as on FY20.

“The company is witnessing encouraging signs post partial lifting of lockdown, with athleisure segment witnessing strong demand. Post lockdown relaxations, share of revenues from ecommerce space has risen sharply to 10 per cent against 4 per cent in FY20,” ICICI Securities said in result update.

Going ahead, analysts at Dolat Capital believe that the volume growth would benefit from pent up demand once the lock down re-opens. In addition, as the company has high contribution of own manufacturing, it is better placed compared to local manufacturers to address supply constraints, especially in the kids segment.

At 10:27 am, Page Industries had partially erased its early morning gain and was trading 6 per cent higher at Rs 20,348, as compared to 0.6 per cent rise in the S&P BSE Sensex. A combined around 92,000 equity shares have changed hands on the NSE and BSE so far.

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