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Systematix Research Report
The innerwear market continues to have robust long-term potential, with penetration of ~18% in men's wear, 5-6% in women's wear, 6-8% in athleisure and 2% in kidswear.
Despite near-term headwinds which has reduced the pace of capacity expansion, Page Industries Ltd. remains positive on the long-term outlook and continues to work on expanding capacity and expanding its product portfolio, while ramping up its distribution reach.
We estimate 10%/17% revenue/earnings per share compound annual growth rate over FY23-25E, and maintain our 'Hold' rating on the stock, with a target price of Rs 38,700 based on 55 times FY25E earnings.
Despite strong growth prospects over the long-term and consistent execution from Page Industries' management, we believe earnings delivery will remain soft in the near-term, given soft demand and competition headwinds with the industry stuck with high inventory.
We therefore suggest waiting for some tangible signs of an improvement in demand conditions before entering the stock.
Unexpected issues arising from attrition in management and distribution, increasing competition from private labels and/or consumer downtrading due to inflation could pose downside risks to our estimates.
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