On Friday, Citi maintained its Sell rating on Page Industries (NS:PAGE) Ltd. (PAG:IN) stock, while increasing the price target to INR35,800 from INR33,100. The adjustment reflects better-than-expected cost control measures that resulted in a 21% and 30% year-over-year (YoY) growth in EBITDA and PAT, respectively, surpassing Citi's estimates by 10%.
The analyst from Citi noted that despite the robust growth in earnings, Page Industries experienced a volume growth of only 6.7% YoY, which fell short of Citi's 8% growth projection. The growth registered a compounded annual growth rate (CAGR) of 3.9% over the pre-Covid period.
The management of Page Industries attributed the improved margins to better cost control, efficiency, and stable raw material costs. They also mentioned that while the onset of the festive season had been positive, there had been no significant improvement in consumer sentiment.
Citi's cautious stance on Page Industries is due to the lack of immediate catalysts or company-specific initiatives that could drive growth. The analyst pointed out that any significant improvement in consumer sentiment or demand trends may not materially benefit Page Industries given the nature of the category, which has relatively low discretionary spending or income elasticity, and the company's low operating leverage.
The report also mentioned that Citi has increased its FY25-27E earnings per share (EPS) estimates for Page Industries by 4-7%, taking into account the better-than-expected margins. The target price-to-earnings (P/E) ratio remains unchanged at 45x, but has been rolled forward to September 2026 estimates from June 2026.
In conclusion, Citi has revised the target price for Page Industries to INR35,800, up from INR33,100, while maintaining the Sell rating. Additionally, Citi continues to recommend an overweight position in Trent (NS:TREN) and an underweight position in Page Industries as part of their pair trade strategy.
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