Page Q2FY20 print was a mixed bag with a modest beat in revenue (up 12%, 6% ahead our estimate) and a miss on operational front (underlying EBITDA was flat YoY, 3% below our estimate).
Page reported a mixed quarter with robust beat in revenue (up 12% led by ~9% volume growth) though operationally the performance was a shade below estimates (underlying EBITDA flat) dragged by GM contraction and higher other expenses. While management remained guarded on near term, it was more optimistic on medium term led by gains from business transformation initiatives taken over past 18 months (key driver of sequential improvement in Q2) and has internally geared up to capitalise on demand pickup, as and when it happens. Given Q2 benefited from low base and advancement of festive season, we will monitor Q2/Q3 combined performance to get more constructive on the stock. Retain REDUCE with revised TP of Rs 23,000 (from Rs 21,900) as we raise our target multiple to 43x Sept-21; our EPS estimates see 3-4% cuts.
Page Q2FY20 print was a mixed bag with a modest beat in revenue (up 12%, 6% ahead our estimate) and a miss on operational front (underlying EBITDA was flat YoY, 3% below our estimate).Volumes grew by 9.2% YoY to 45.6 mn pieces while realisation per piece grew at 2.6% YoY to Rs 166.8/piece. Decline in underlying EBITDA was on account of 230 bps contraction in EBITDA margin to 18.4% dragged by 180 bps YoY decline in GM to 56% (180 bps below our estimate, led by increased sales incentives) and 40 bps rise in other expenses (up 14% YoY partly due to sales conference expenses and retail schemes). Recurring PAT (comparable) increased by 23% YoY to Rs 1.14 bn (3% below estimate) aided by lower tax expense partly negated by ~50% decline in other income (high base) and 15%/14% increase in depreciation and interest expense. Management highlighted demand conditions have improved a tad sequentially albeit sluggish footfalls and tight liquidity conditions remain key challenges.