Page Industries shares climb 5%, hit Rs 47,000 mark; more gains ahead?

Page Industries Ltd climbed 5 per cent in Friday's trade to hit its fresh 52-week high level following a strong set of September quarter results. The uptick in growth was driven by an increasing share of e-commerce, in particular quick commerce’s contribution. Ebitda margin improved driven by cost-optimisation initiatives. The stock rose 4.55 per cent to hit a high of Rs 47,161. It is up 21.53 per cent year-to-date. Anlaysts are positive on the company's prospects, but are unsure whether the prevailing rich stock valuations may sustain.

Page Industries maintained its margin guidance of 19–21 per cent for FY25 on increased IT spending in Q3 and Q4. The EBO addition guidance was also maintained at 150–180.

Given improving growth prospects for the company combined with margin efficiencies that management has projected, Nuvama revised its target PE for Page to 55 times to 55 times, which has been its long-term average.

"We are tweaking up FY25E/26E PAT by 7.4 per cent/7.4 per cent. These along with a valuation rollover to H1FY27E yield an increased target price of Rs 42,803 (earlier Rs 33,326). The recent run-up captures revenue growth as well as margin improvement and, hence, we maintain ‘REDUCE’," Nuvama said.

Page Industries reported Q2 sales growth of 11 per cent, with healthy 7 per cent YoY volume growth. Demand improved sequentially, but a full recovery is likely in H2FY25.

"Demand uptick during the festive season has helped to further liquidate trade inventory by 3 days. The implementation of ARS system has been driving inventory efficiency for distributors, resulting in better secondary order fulfilment. Primary growth was lagging behind secondary due to high trade inventory; we believe it will converge in 2HFY25," said MOFSL.

The Page stock has underperformed the market in the last two years, with the stock falling 15 per cent owing to weak volume growth. With volume growth pressure bottoming out and benign input costs likely to lead to a better margin print, MOFSL expects the earnings cycle to pick up from hereon.

"We believe the valuation will remain rich, as we can find only a few consumer stocks with comfort on both growth and margin in the near term. We upgrade our rating from Neutral to BUY with a revised target price of Rs 54,000, premised on 60x Mar’27E EPS," it said.