Page Industries Q4FY21 Concall Summary

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Business Updates

  • Volumes for Q4 grew by 54% on a yoy basis
  • The company has added 180 new EBO’s during the year
  • The upward trend in demand seen during Q3 was seen in Q4 as well
  • The kids business is a special focus area for the management and now there are 38 EBO’s which are dedicated for the junior’s segment with a dedicated team looking after the same
  • Many usual costs had come back in Q4 which is why on a sequential basis the margins have come lower

Participants

  • Macquarie
  • Goldman Sachs
  • Kotak
  • Stallion Asset
  • Credit Suisse
  • SPARK Capital
  • B&K Securities
  • Franklin Templeton
  • ASK Investment Managers
  • IIFL

QnA

  • The demand continued to be good in the current quarter until the lockdown was enforced. The company was allowed to work with 50% workforce but because the problem in Bangalore is so bad the company hasn’t been opening factories since a month
  • There is sufficient stock in warehouse and also with the distributors 
  • The secondary sales have been higher in the 4th quarter than the primary sales
  • The aspirational EBITDA margin continues to be in the 20-21% range for the management but there could be one off quarters where it is slightly lower or higher
  • The management is very positive about the demand going forward
  • The industry is growing at a fast pace and the management is focusing on execution and increasing reach of its products by opening new outlets to reach consumers faster
  • The management has focused on procurement of inventories because of a pressure of increasing yarn prices and also to protect against a stock out situation
  • The contribution of the top 6 cities initially during first part of pandemic was lower and during Q3&Q4 as urban centres were back with demand it was more broad based
  • The new store openings have been across Tier1-4 towns and cities
  • The price hikes are usually between 3-4% but they are higher around 4-5% this year because of inflationary pressures on raw materials
  • The management views market share as more important than gross margins
  • For the rural market the management has created a bouquet of the fastest selling products for this market with a specific pricing strategy suited for the rural market
  • The distributors have been very happy with implementation of the ARS and it has helped them liquidate the slow moving stocks
  • The management continues to work a lot on opex transformation so that some impact of raw material hikes are absorbed in the efficiencies
  • The resumption of operations at the company’s factories will take place after the lockdown is lifted from June 7th
  • The ecommerce business is an important channel and on a full year basis the contribution of online sales to total sales was 8%
  • The men’s innerwear is still the biggest category for the company and the only way to grow that business is to focus on increasing distribution
  • The kind of range that the company has developed across all its categories it has become imperative to now open category specific stores and that is where the company has been focusing
  • There is not a huge difference between margins of ecom and offline business and infact the costs in ecom are slightly higher than the regular offline business
  • Over the next decade it should be very easy to achieve a revenue growth of 8-10%
  • The payables at year end are higher because most of the inventory was purchased by the end of the quarter
  • The market size is very large for the company and the penetration levels are so low that entry of competition is not a problem from the point of view of hurting margins for the company

Karan Sharma

Karan Sharma

The Concall Summary Guy | CFA | Investor
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