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  • Stock recommendation: Page Industries — Sell — Target price Rs 25,000

    Publish date: August 10, 2018

    Results update: A league of its own

    Page Industries delivered solid EBITDA and profit after tax (PAT) numbers, though its revenue and volume growth could have been better.

    The striking aspect about the company’s first quarter result is that it has managed to post an impressive two-year growth.

    Unlike most companies that have shown impressive volume and revenue growth due to last year’s GST disruption, Page has been in a league of its own. That’s because if you base their result on the two-year CAGR basis, the company’s volume and revenue has grown by 11% and 20% respectively.

    Key highlights

    • The company’s PAT surged by 46% (YoY), which is 12% ahead of our estimate.
    • The EBITDA margin grew by 360 bps to 23.2%, which is 200 bps ahead of our estimate. The margin expansion was largely due to low employee costs and other expenses, which grew by 7% and 8% respectively.
    • The healthy EBITDA margins have spurred the company’s earnings in the last two quarters. Incidentally, the margin expansion has been higher than even what the management had expected.

    Valuation & outlook

    Page had a solid quarter but its lofty stock valuation keeps us cautious.

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