Page Industries Shares: A ‘Buy’ Call Despite Rich Valuations
Page Industries Ltd. has had a stupendous track record of revenue and earnings growth over the past decade. In FY25, Page posted a CAGR of 12%/13%/14% in sales/Ebitda/PAT, despite facing challenges during the year. Earnings growth was led by best-of-breed sales growth, with lower utilization of the margin lever. Moreover, it has delivered a return on equity (RoE) of over 40% in the last 10 years.
Why Motilal Oswal Maintains a ‘Buy’ Call
Despite the rich valuations, Motilal Oswal has maintained a ‘buy’ call on Page Industries shares. The brokerage firm believes that the company’s strong track record, best-of-breed sales growth, and high return on equity justify the current valuations. Additionally, the company’s ability to navigate challenges and deliver consistent growth makes it an attractive investment opportunity.
Key Drivers of Growth
The key drivers of growth for Page Industries have been its strong brand portfolio, including Jockey and Speedo, and its ability to expand its distribution network and increase its market share. The company has also been investing in digital marketing and e-commerce, which has helped to drive sales growth. Furthermore, the company’s focus on innovation and product development has enabled it to stay ahead of the competition and maintain its market leadership.
Challenges Ahead
Despite the strong growth prospects, Page Industries faces several challenges ahead. The company operates in a highly competitive industry, and the increasing competition from new entrants and existing players could impact its market share and pricing power. Additionally, the company’s high dependence on a few key brands and products makes it vulnerable to any disruptions in the supply chain or changes in consumer preferences.
Valuations and Investment Rationale
Page Industries shares are currently trading at a price-to-earnings (P/E) ratio of 40x, which is higher than the industry average. However, Motilal Oswal believes that the company’s strong growth prospects, high return on equity, and market leadership justify the current valuations. The brokerage firm has set a target price of Rs. 50,000 for the stock, which represents a potential upside of 20% from the current levels.
Conclusion
In conclusion, Page Industries shares are a compelling investment opportunity, despite the rich valuations. The company’s strong track record, best-of-breed sales growth, and high return on equity make it an attractive investment opportunity. However, investors should be aware of the challenges ahead and the potential risks to the company’s growth prospects. As always, it is essential to do your own research and consult with a financial advisor before making any investment decisions.
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