20-Sep-2022

PAGE INDUSTRIES LIMITED

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Page Industries Limited is a leading player in the premium inner-wear and athleisure market. The company is an exclusive licensee for
DHD
JOCKEY International Inc (USA) for manufacturing, distribution & marketing in India, Sri Lanka, Bangladesh, Nepal, Oman, Qatar,
Maldives, Bhutan & UAE. The products include innerwear, athleisure, socks for men & women, thermal, towel, caps & face mask.
Additionally, the company has an exclusive license for Speedo International Limited for manufacturing, distribution & marketing in India
(based in Nottingham, UK) which is a manufacturer & distributor of swimwear & swimming accessories including water shorts, apparel &
footwear.
Jockey brand accounts for majority of the revenue. It is distributed across 2,852 plus cities and towns. The products are sold through
Exclusive Brand Outlets (EBO), Large Format Stores (LFS) and Multi Brand Outlets (MBO), as well as online (own website as well as other
partners like Myntra, Amazon, Zivame, etc.). Across the above channels, the brand is present in 1,10,548 plus stores. These outlets are
spread throughout India covering even tier-II and tier-III cities. Apart from the domestic EBOs, the company has nine operational EBOs
outside India, six in UAE (with another six stores in progress) and three in Sri Lanka. As on 31st March 2022, Speedo brand is available in
1,340 plus stores, 26 EBOs and 12 LFS spread across 230 plus cities. The company has forayed into kids segment recently and already has
38 exclusive junior outlets. The company’s kids wear business continues to be a special focus area. It has over 71 EBOs under Jockey
Junior along with specific channel partners across 50 cities.
The company has a production capacity of 260 million pieces and has 15 manufacturing units in Karnataka.

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DHD REVENUE MIX (FY22)

Segment Wise Geography Wise

5% 5%

95%
95%

Innerwear and leisurewear Others India Rest of the World

Others include sale of scrap and other materials, duty drawback, other operating income (yarn incentives, etc)

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 GROWTH
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DHD SALES GROWTH

In FY22, the net sales was ₹3,887 cr witnessing a
growth of 37.2% YoY. It reported robust sales growth
aided by progress across all product categories. The
YoY volume growth in FY22 was 28.9%. The growth
was broad based across distribution, modern-trade &
e-commerce. The enablers for the same were retail
expansion, new product introductions, focus on
digital initiatives, innovation & supply chain.
In Q1 FY23, the net sales grew to ₹1,341.3 cr. It
registered robust revenue growth aided by low base
of Q1 FY22 and expansion across all product
categories. It intensified focus on distribution,
modern trade, e-commerce and concentration on
B2C side of the business also contributed towards
the growth during the quarter. There was a volume
growth of 26% on a QoQ basis.

5 Year CAGR: 12.8%

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 GROWTH
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DHD EBITDA GROWTH

In FY22, EBITDA was ₹786 cr and grew by 49.2% YoY.
Their growth was on the back of increase in net sales
despite, rise in cost of materials consumed & other
expenses. During the year, their advertising expenses
increased to 2.5% of revenue from 1.1% in FY21.
In Q1 FY23, EBITDA increased to ₹298 cr. The supply
chain is now back on track despite major demand
shifts. During the quarter, the company observed
high inflationary trend in cotton prices, packaging,
fuel and logistics.

5 Year CAGR: 13.7%

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DHD PAT GROWTH

In FY22, the company reported a profit of ₹537 cr
and saw an increase of 57.5% YoY. The rise was on
account of increase in operating profits.
Effective tax rate for FY22 was 24.3% v/s 24.9% in

as
FY21.
In Q1 FY23, the net profit increased to ₹207 cr.

5 Year CAGR: 15.1%

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 GROWTH EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 PROFITABILITY
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DHD EBITDA MARGIN

EBITDA margin during FY22 was 20.2%. The company
did not undertake any further price increase post the
ones taken at ~5% in Q1 FY22 and ~8% in Q3 FY22.
Further, the company would manoeuvre the rising
inflation with internal operational efficiency.
In Q1 FY23, the EBITDA margin was 22.2%. The
company undertook a price hike of ~3.5%-4.5%
during the quarter. Cotton prices continued to remain
volatile. However, the company was able to maintain
margins backed by expense control measures and
optimum use of inventories.

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DHD PAT MARGIN

During FY22, the PAT margin stood at 13.8%.
In Q1 FY23, the metric was 15.4%.

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DHD ROCE
The 5-year average ROCE of the company stood at
~65%.
In FY22, the metric increased to 75.2% on the back of
increase in PBIT.

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DHD ROE
ROE during FY22 stood at ~54.4%. The rise was on
the back of increase in net profit. The net worth was
~₹1,088.6 cr.

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 PROFITABILITY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 EFFICIENCY
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DHD CASH FLOWS

In FY22, the cash flow from operations stood at ₹327
cr. The decline was majorly owing to working capital
adjustments which included increase in inventories
by ₹420 cr and other assets at ₹50 cr, respectively.
Further, there was an increase in other liabilities,
trade payables, other financial liabilities & provision.
Cash inflow from investing activities was ₹119 cr.
There was net proceeds from maturity of fixed
deposits at ~₹205 cr and net purchase of property,
plant & equipment at ~₹98 cr.
Cash outflow from financing activities was ₹396 cr.
The outflow included dividends paid at ~₹335 cr,
payment of lease liabilities ₹31 cr and interest paid
on lease liabilities at ₹11 cr.

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 EFFICIENCY
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WORKING
DHD CAPITAL CYCLE
The company’s working capital days stood at 17 days.
The working capital cycle improved on account of
decrease in days of inventory and increase in days of
payables.
The net working capital increased to ₹731.2 cr as on
30th June 2022 on the back of rise in inventory levels
to ₹1,120.4 cr. The company has been building up
good quality inventory over the last few quarters.

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 EFFICIENCY
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DHD FREE CASH FLOW

In FY22, the free cash flow per share stood at ₹191.
The company generally incurs a capex of ~₹300-
₹400 cr every year. It plans to spend ₹450 cr as
capex in FY23 towards their Odisha manufacturing
unit, expansion in digital technology roadmap and
also for various other initiatives in the front end as
well as back end. Historically, the capex spending
has been in the range of ₹200-₹250 cr.

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 EFFICIENCY
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ASSET
DHD TURNOVER RATIO
In FY22, the asset turnover ratio improved to 2.12x,
due to increase in sales.
The increase in total assets was majorly pertaining to
rise in property, plant & equipment, capital work-in-
progress, inventories, trade receivables, cash & cash
equivalents and other current assets.

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 EFFICIENCY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 SOLVENCY
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DHD DEBT TO EQUITY

The company does not have any outstanding debt in
its books.

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 SOLVENCY
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INTEREST
DHD COVERAGE RATIO
In FY22, the interest coverage ratio stood at 22.09x.
The interest obligations of the company majorly
attributed to lease liabilities and on dealer deposits.
Nonetheless, the company has sufficient profitability
to meet the interest obligations.

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 SOLVENCY
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DHD CURRENT RATIO

In FY22, the current ratio was 1.67x.
Current assets majorly comprised of inventories ₹975
cr, bank balance ₹195 cr, trade receivables ₹165 cr
and other current assets at ₹139 cr. Current liabilities
majorly constituted other financial liabilities at ₹456
cr and trade payables at ₹363 cr.

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 SOLVENCY EDGE METER: 5
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 VALUATION
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DHD PE RATIO
The company is currently trading at a TTM PE multiple
of 76.68x.
It is targeting expansion in tier III and tier IV cities,
which can be a volume driver for the company.
Additionally, it is foraying into the unorganized kids
wear space. The company has been able to maintain a
strong brand equity over the years. They anticipate
huge potential in the international markets.

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DHD DIVIDEND YIELD

In FY22, it declared two interim dividends of
₹50/share and ₹150/share.
It declared an interim dividend of ₹100/share on 10th
Feb 2022. An interim dividend of ₹70/share was
declared in June 2022. The dividend payout ratio in
FY22 stood at 76.92%.
An interim dividend of ₹60/share was declared in
August 2022.

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 VALUATION
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DHD KEY LEVELS

Page Industries Ltd. had been in a structural uptrend
from its listing in 2008 to the year 2018. Thereafter, the
stock witnessed some cooling off. It consolidated in the
range of ₹18000-₹26000 between Dec 2018 to Jan
2020.
After creating a low of ₹16250 in the panic of Mar 2020,
the stock has nearly tripled, making a lifetime high of
₹51500 recently.
₹40000-₹42000 will now act as a strong base for the
stock.

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 VALUATION EDGE METER: 2
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 QUALITY
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DHD MANAGEMENT
The management is looking at capacity expansion
with increased infrastructure and facilities. This will
allow scalability and ramp up incremental machinery
and manpower to meet the expected growth in
demand.
The company is also significantly expanding their
presence by opening several EBOs along with large
format stores, multi brand outlets, thereby ensuring
brand availability and accessibility across the country.

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SHAREHOLDING
DHD PATTERN
The Promoters’ stake in the company reduced from
47.19% in Q4 FY22 to 46.12% in Q1 FY23.
FII decreased their stake in the company from 25.21%
in Q4 FY22 to 25.18% in Q1 FY23.
DII stake increased from 17.68% in Q4 FY22 to
18.83% in Q1 FY23.
Top Public Shareholding:-
Nalanda India Fund Limited 7.56%
SBI Focused Equity Fund 7.48%
HDFC Life Insurance Co. Limited 1.78%
Mirae Asset Emerging Bluechip Fund 1.28%
St James Place Emerging Markets 1.21%

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 QUALITY
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DHD SECTOR POTENTIAL

• The Indian domestic textile and apparel market was estimated at $99 billion in FY22. The market is expected to grow at 10% CAGR
from FY19 to reach $190 billion by FY26. India has a share of 4% of the global trade in textiles and apparel.
• Men’s innerwear is expected to grow at a CAGR of 10.3% to contribute nearly ~$3.1 billion in FY25 from $1.9 billion in FY20.
• Women’s innerwear category was estimated at ~$4.4 billion in FY20 and is expected to grow at a CAGR of 14% and nearly double by
FY25.
• The kids wear market in India is expected to grow at a CAGR of 10.5% to ~$23 billion by FY25. Kids’ denims segment is showing the
fastest growth rate of 13% among all the other product categories.
• Innerwear market is currently estimated at ~9% of the total domestic fashion retail market.
• The men’s casual and activewear is expected to grow at a CAGR of 13.9% to $14.9 billion in FY25. Women’s casualwear category is
expected to grow at a CAGR of 16.1% to $1.9 billion in FY25.
• E-commerce market is anticipated to rise by 21.5% reaching $74.8 billion in 2022 and is likely to reach $350 billion by 2030 with
fashion apparel likely to be its key growth drivers.

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COMPETITIVE
DHD LANDSCAPE
Page Industries has an International brand recall,
typically operates under the mid-premium segment
and it offers to its consumer, a combination of the
product differentiation around comfort and
durability, reasonable prices and has widespread
distribution across rural and urban areas.
Unlike the traditional MBO model, Jockey focused
and distributed its products through EBO (Exclusive
brand outlets) along with MBOs to reach wider
masses and create strong product differentiation.
Additionally, the company also focused on its core
categories and developed strategies around the same
to expand and capture market share.

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DHD FUTURE OUTLOOK

• The company sees great potential in the rural markets, tier III and tier IV cities and are strengthening the distribution network in a
phased manner in these markets. It would be doubling up its EBOs over the next 4-5 years. From the earlier revenue guidance of $1
billion by FY26, the company has now guided for $2 billion and more by that time.
• The work at the Odisha plant for the company’s modern classic vertical is in progress after obtaining required approvals from
various statutory authorities. The facility is planned to commission in Q4 FY23. It is spread across 29 acres and the facility will have
a state-of- the-art campus with central stores, elastics, socks and cut to pack manufacturing activities. The facility is being built by
renowned contractors. The company is working towards significant capacity expansion in its socks division with an additional 60
advanced knitting machines at the Bangalore facility to meet the rising demand.
• The company has planned a 20,000 sq ft yarn/greige fabric store at Tirupur to cover strategic stock positioning, contributing
significantly towards a volatile commodity market for yarn. This facility is expected to be commissioned during Q1 FY23.
• It saw equal traction in demand across tier I, tier II, tier III cities & metros. Further, a shift was seen in consumers behavior towards
premiumization and the company has been undertaking increased efforts on the supply chain side to meet the growing demand
across the same.
• E-commerce channel is currently contributing ~8.5% towards revenue and is envisaged to be on a rising trend in the times ahead.

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DHD FUTURE OUTLOOK

• The company is planning an additional 40,000 sq ft space adjacent to their existing elastic manufacturing premises at Hassan to
meet the growing requirements of women’s dyed elastic.
• It has planned a cup molding & hook-n-eye forming project at Hassan to produce in-house bra cups and hook-n-eye forms. The
project is planned to be completed by Q3 FY23. This facility will reduce their import dependency enabling them to focus on
improving quality, lead time and cost control.
• The company is adding a 1,20,000 sq ft elastic manufacturing set-up at Mysore to include imported high-end jacquard and knitted
looms to produce complex technical designs in-house for the premium category. The project is expected to be commissioned
before H2 FY23.
• To meet the increased demand in the premium vertical, the company is planning to add 80,000 sq ft cut-to-pack facility in Mysore.
The commissioning is expected to be complete by the end of FY23.
• The strategy of introducing kids wear across exclusive womenswear stores has shown good results and the company is confident of
making inroads into this nascent and fast-growing segment.

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 QUALITY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 FINAL
ABOUT EDGE
THE MATRIX
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DHD
Edge Meter Aspects Grade
Growth 4
Profitability 4
Efficiency 4
Solvency 5
Valuation 2
Quality 4

TOTAL 23
The maximum grade for a company could be 30. Any company above grade 20
is worth considering. A grade below 15 is considered to be poor.
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DHD

THANK YOU
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equity involves individual judgements, this analysis should be used for only learning enhancements and cannot be considered to
be a recommendation on any stock or sector. Our knowledge team has limited understanding and we all are learning the art and
science behind this.

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DISCLOSURES
DHD
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