Motilal Oswal has issued a Buy recommendation on Page Industries (PAGE), revising the target price to Rs 54,000, an expected 20% upside. Page Industries, known for its premium innerwear and athleisure brands, has demonstrated significant operational improvements in 2QFY25. Strong volume growth, enhanced margins, and robust performance in e-commerce channels underscore the company’s ability to navigate current market dynamics. Here, we break down the analysis and key highlights that have prompted the positive outlook.

Robust Performance and Growth Trajectory

Volume Growth Exceeds Expectations: In 2QFY25, Page Industries reported an 11% YoY sales growth, totaling Rs 12.5 billion. This includes a notable volume growth of 6.7% YoY to 55 million pieces, surpassing the anticipated 3.5%. The uptick was fueled by improved demand during the festive season and efficient inventory management.

E-commerce Growth Outpaces Average: E-commerce has become a significant contributor, with a 41% growth in the first half of FY25, driven by quick commerce and a growing shift towards online shopping. This digital channel is projected to sustain momentum in 2HFY25.

Expansion in Margins and Operational Efficiency

Improved Gross Margin and EBITDA: Page Industries’ gross margin rose by 80 basis points (bps) YoY to 56.5%, and EBITDA margin expanded by 180 bps YoY to 22.6%—the highest in ten quarters. The margin gains were attributed to stable raw material costs and enhanced operational efficiency, which also helped lower employee expenses by 165 bps YoY.

Strong Profit Growth: EBITDA grew 21% YoY to Rs 2.8 billion, with profit before tax (PBT) and adjusted PAT rising 31% and 30% YoY, respectively. These gains underscore Page Industries’ effective cost management and revenue growth strategy.

Expansion Initiatives and Strategic Plans

Growing Network of Exclusive Brand Outlets (EBOs): Page Industries has been actively expanding its physical presence. The company aims to increase the number of EBOs by 150–180 stores annually, bringing the total to around 1,550 by FY25. This strategic expansion is designed to increase brand accessibility, especially in emerging markets.

New Production Facility: The Orissa facility, slated to begin operations in 4QFY25, will support the company’s growing demand across segments. This addition is expected to boost production capacity and facilitate faster fulfillment of orders.

Product Portfolio and Segmental Focus

Focus on Women’s and Kids’ Categories: Recent launches in the women’s and kids' segments have contributed to Page Industries’ growth, supported by a dedicated sales team. The company has broadened its product range to cater to diverse consumer needs, enhancing its appeal across demographics.

Growth in Athleisure Segment: Athleisure continues to gain traction as a growing segment, bolstered by increasing consumer demand for comfort and versatile apparel. The company has capitalized on this trend by introducing new product lines in cotton stretch and synthetic materials, further appealing to a broader audience.

Financial Performance and Guidance

Stable Revenue and Profit Growth Forecasts: Motilal Oswal expects Page Industries’ sales to grow at a compound annual growth rate (CAGR) of 13% over FY24-27, with a projected EBITDA and PAT CAGR of 17% and 19%, respectively. The company’s historical execution strength and market positioning are expected to support these growth targets.

Dividend and Shareholder Returns: Page Industries has a dividend payout policy of approximately 60% of its PAT. With a robust earnings outlook and improved cash flow, the dividend yield is expected to provide additional value for investors.

Valuation and Investment Recommendation

Upgraded Target Price: Motilal Oswal’s revised target price of Rs 54,000 is based on a valuation of 60x Mar’27E EPS, reflecting confidence in Page Industries’ growth potential. The company’s strong performance, combined with a broad market opportunity, is likely to yield further valuation upside.

Long-Term Buy Recommendation: The Buy recommendation underscores Motilal Oswal’s belief in Page Industries’ continued revenue expansion, margin stability, and strategic positioning in the consumer sector. Investors are advised to consider this stock as a long-term growth play within the innerwear and athleisure segments.