Page Industries Valuation Excel Model and Intrinsic Value of Shares

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Page Industries Valuation : About the Company

Page Industries operates its two flagship licensed brands named Jockey and Speedo. The Jockey brand (USA) is the market leader in the premium innerwear category and focused on high-quality products. It is the first innerwear brand to set up Exclusive Brand Stores. Page Industries is the sole licensee for the manufacturing, marketing and distribution of the UK based SPEEDO brand in India. Speedo products include Swimwear, Equipment, Water shorts, Apparel and Footwear. From here, we go ahead with Page Industries Valuation and Intrinsic Value of its shares.

The introduction of high-quality products and large distribution network has created a paradigm shift in the way consumers perceive innerwear in India. Page industries were able to transform the Indian market with its Jockey brand. The company has 1.78+ Million Sq. Ft of production facility across 13 factories out of which 9 are based in Bangalore. They have a total of 18500+ employees engaged in the manufacturing process. With this, they have achieved the economies of scale and have become the largest player in the premium innerwear category. The Jockey and Speedo brands also enjoy the Top of the Mind recall amongst the youth population in India. Such scale and brand awareness are very hard to imitate. Therefore this category gets 4 stars in Page Industries shares fundamental analysis as the company has a solid moat but it is still not a monopoly.

Read more here: Page Industries Shares Fundamental Analysis 

Methodology Used:

Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future. The following step by step procedure is followed.

  1. Determining the Revenue Growth Rates
  2. Forecasting the Financial Statements
  3. Deriving the FCFF and FCFE
  4. Calculating the Terminal Value
  5. Calculating the Discount Rate
  6. Discounting the Cashflows
  7. Arriving at the Intrinsic Value of the Shares
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You can also get the formula based DCF Excel Model from below:

Step 1: Determining the Revenue Growth Rates

We arrive at the below table by using the past and expected future performance of both the company and the economy. This along with adjustments to changes in the management expectations, extraordinary events and other macro factors give the revenue growth rates for Page Industries Valuation.

Financial Year Revenue Growth Rate
Year 1 4%
Year 2 -13%
Year 3 32%
Year 4 14%
Year 5 13%
Revenue Growth Rates: Page Industries Valuation

Step 2: Forecasting the Financial Statements

The financial statements are forecasted for a period of 5 years using the annual report data of the company. The assumptions used for forecasting are tabulated below. The Excel model is completely editable and can be adjusted for specific changes which may happen over a period of time.

Financial Statements Forecast : Page Industries Valuation
Financial Statements Forecast : Page Industries Valuation

Step 3: Deriving the FCFF and FCFE

Free cash flow to the firm (FCFF) represents the amount of cash flow from operations available for distribution after accounting for depreciation expenses, taxes, working capital, and investments. FCFF is a measurement of a company’s profitability after all expenses and reinvestments. It is given as follows.

Free cash flow to equity (FCFE) is a measure of how much cash is available to the equity shareholders of a company after all expenses, reinvestment, and debt are paid. FCFE is a measure of equity capital usage.

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F/S Items (INR Millions) Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
Free Cash Flow to Firm 5607 4840 6593 7816 9106
Free Cash Flow to Equity 7179 4233 10173 10441 12007
FCFF and FCFE values: Page Industries Valuation

Step 4: Calculating the Terminal Value

Terminal value (TV) is the value of a business or project beyond the forecast period when future cash flows can be estimated. It assumes that a business will grow at a set growth rate forever after the forecast period. Terminal value often comprises a large percentage of the total assessed value.

Terminal Value Calculation Units INR Millions
Free Cash Flow to Firm 9105.97
Growth Rate 6.00%
Cost of Capital 9.58%
Terminal Value 269676.95
Terminal Value: Page Industries Valuation

Step 5: Calculating the Discount Rate

DCF analysis helps assess the viability of a project or investment by calculating the present value of expected future cash flows using a discount rate. Here we use the Weighted average cost of capital (WACC) to discount the cash flow. The below table from the excel model shows the calculation of WACC for Page Industries Valuation.

WACC Calculation for Page Industries Valuation.
WACC Calculation for Page Industries Valuation.

Step 6: Discounting the Cashflows

The WACC and the Cost of Equity for the company calculated in the above step are then used to discount the FCFF, FCFE and Terminal Value calculated in Step 3 and 4. In our case, we’ll only consider the FCFF based Intrinsic price of the shares as it represents the cash flow to all the suppliers of capital and not only to the equity shareholders. Thus we arrive at Present value of future FCFF for Page Industries Valuation. (Units are INR Millions)

PV of FCFF and FCFE  for Page Industries Valuation.
PV of FCFF and FCFE for Page Industries Valuation.

Step 7: Arriving at the Intrinsic Value of the Shares

Dividing the PV of the FCFF and Terminal Value (the Value of the entire firm) by the number of outstanding shares we get the per share intrinsic value. We can compare this price with the current market price of the stock to get the Discount or Premium to its intrinsic price.

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Page Industries Valuation Units
PV in INR Million 175338
No of Shares Outstanding (In Million) 11
Intrinsic Value 15939.79
Current Market Price of Share 28040
Current Discount/Premium 75%
Intrinsic Value of the Shares: Page Industries Valuation

Page Industries Valuation and Intrinsic Share Price = INR 15939.79

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References: Investopedia
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(Note: All the research done by me is only for educational purposes and should not be seen as Investment recommendations. I am a Research analyst and not a SEBI registered Investment Advisor. My research completely reflects my personal opinions and not of my employers. Kindly do your own due diligence before Investing)

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