Motilal Oswal: Page Ind’s topline growth target hard to achieve

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Published: August 29, 2019 3:13:20 AM

The management is targeting 20% topline growth (led by 10% volume growth) for FY20. But, we believe this target is difficult to achieve, particularly as trade liquidity concerns have persisted for the first few months in FY20.

Motilal Oswal, PAG, Page Ind topline growth, EBIDTA, exclusive brand outlet During FY19, through its authorised franchisees, PAG opened 161 EBOs, including nine ‘Jockey Woman’ EBOs, which cater exclusively to women customers.

FY19 turned out to be a tough year for PAG; performance was dragged by lower volume growth (+5.6%) and muted growth of 3%/5.8% in its key segments of men’s/women’s innerwear. Sales/EBIDTA/Adj. PAT for FY19 grew 11.8%/14.1%/13.5%. We believe the year under review was impacted by subdued consumption, trade liquidity issues and competition.

The management is targeting 20% topline growth (led by 10% volume growth) for FY20. But, we believe this target is difficult to achieve, particularly as trade liquidity concerns have persisted for the first few months in FY20. However, we believe the long-term growth prospects remain healthy. The Indian innerwear market is expected to grow at 10% CAGR over 2017-27 while Men’s/Women’s innerwear is estimated to grow 6%/12%. Newer segments, mainly Athleisure and Kid’s innerwear, are expected to grow even faster.

Clearly, PAG intends to seize this opportunity by improving its reach, especially via the exclusive brand outlet (EBO) route. Even when consumption pattern was subdued, PAG has continued adding EBOs aggressively.

During FY19, through its authorised franchisees, PAG opened 161 EBOs, including nine ‘Jockey Woman’ EBOs, which cater exclusively to women customers. Hence, the total number of EBOs is now at 620 (net addition of 150 EBOs for the year). In terms of total reach (through EBOs, MBOs, large format stores (LFS), traditional hosiery stores and multi-purpose stores), ‘Jockey’ is now available in >55,000 outlets across the country.

EBO store count has increased 2.3x in the past three years – from 265 stores in end-FY16 to 620 stores currently. The online medium is also growing massively for Jockey.

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