Page Industries Limited

Page Industries Limited Company Valuation

10/7/2011

FinExpertise- Research & Valuation Analyst: Rajat Dhar

Contact Details:

Mobile + (91)-9999.760.359

E-Mail [email protected]

Website: www.finexpertise.blogspot.com

Bloomberg Ticker: PAG: IN | Sector: Consumer Goods, Cyclical | Industry: Textile – Apparel Clothing | Sub Industry: Apparel Manufacturers

We are Launching a fully dedicated

website for Research & Valuation in

a week’s time by 1st Nov’11, hosting

scores of Research Reports. Stay in

touch.

mailto:[email protected]

http://www.finexpertise.blogspot.com/

October 7, 2011 [PAGE INDUSTRIES LIMITED] www.finexpertise.blogspot.com

FinExpertise – Research & Analytics. .All Rights Reserved. Page 2

Table of Contents

Section Page#

1

Review of Page Industries Limited. 3

A

Industry Structure & Development 4

B

Business / Segment Overview

5

C

Product Line

6

2

Financial Overview - Page Industries 7

A

Common size Statement Analysis 8

a Balance Sheet Analysis

8

b Profit & Loss Analysis

9

3

Historical Stock Trend Analysis

10

A

Price-Volume Graph

11

B

Indexed Stock Price Performance 11

4

Valuations

12

A

Current Valuations

13

B

Adjusted Clean Numbers (LTM / TTM) 13

C

Projection Snapshot

13

5

Financial Review - Detailed

14

A

Historical & Projected Financial Review 15

B

Raw Material's Analysis

16

C

Internal Liquidity Analysis

17

D

Operating Performance Analysis 18



Table of Contents

(…contd)

Section

Page#

6

Risk Analysis

19

A

Financial Risk Analysis

20

B

Business Risk Analysis

21

7

Growth Analysis

22

A

Key Growth Statistics

23

B

DUPONT Analysis

23

C

Stock Projections

23

8

Profile

24

A

Shareholding Pattern

25

B

Management Profile

26

C

Contact Details

26

9

Analyst Details

27

A

Brief Profile

B

Key Expertise

10

Contact Details

28

11 Disclaimer 28



1. Review of Page Industries Limited

A. Industry Structure & Development

B. Business / Segment Overview

C. Product Line



A. Industry Structure & Development The domestic innerwear industry is valued by industry sources at Rs. 140 billion, accounting for 9% of the Indian apparel industry (valued at Rs. 1500 billion).Women’s

innerwear accounts for 66% of spend on innerwear (Rs. 90 billion) while men’s innerwear accounts for 34% (Rs. 50 billion).The innerwear market is growing at a faster rate

than overall apparel market, and has been witnessing 16% revenue CAGR over FY 06-10.

The innerwear market can be d ivided into low, economy, middle, premium and super – premium segments. The premium and super – premium segments are branded markets

characterized by faster growth. As per KSA Techno Pack Report 2005 the men’s premium market is growing at the rate of 28% per annum and super premium market is

growing at the rate of 40% per annum. Similarly women’s innerwear premium market is growing at the rate of 31% per annum and super premium market is growing at over

40% per annum.

Government of India has extended the Technology Upgradation Fund (TUF) for the eleventh five year plan and has increased fund allocation. Government of India is also

setting up various apparel Parks, integrated textile parks and Special Economic Zones in partnership with private sector.

Opportunities: The premium innerwear industry is expected to grow at high rate due to the following factors.

1. Rising urbanization as well as penetration of organized retailing.

2. Increasing brand aspiration among consumers

3. Higher disposable income

4. Change in consumer behaviour

5. Shift from unorganized to organized sector

6. Larger marketing spend by companies creating general awareness of the product

7. Rap id expansion of modern retail format

Threats:

All the major international innerwear Brands have commenced operations in India realizing that the Indian Market is likely to emerge as one of the largest market in the

World in the next few decades.

Outlook:

In anticipation of growing demand, the Company has substantially expanded its installed production capacity. And with the ongoin g addition of new buildings, infrastructure

and facilities, the installed capacity is scalable and can be ramped up with incremental machinery to meet the expected healthy growth in demand.



B. Business / Segment Overview.

(in INR

Mn)

Key Financial Indicators

2007 2008 2009 2010 2011

2012 (E) 2013 (E) 2014 (E)

Revenue 1359.39 1923.48 2546.51 3393.80 4915.62

7,127.6 10,335.1 14,985.9

EBITDA 206.38 339.33 657.38 1475.51 1232.31

1,926.3 3,011.3 4,707.2

EBIT 148.27 245.56 508.80 1238.12 903.92

1,437.9 2,287.2 3,638.3

EPS 5.66 13.51 34.95 95.74 60.99

93.42 135.46 196.42

DPS 4.37 10.00 17.00 21.00 26.00 42.04 70.44 102.14

Innerwear

Men

Women

Leisure wear

Men

Women

Page Industries Limited Page Industries is the exclusive licensee of Jockey International Inc. (USA) and has recently signed an agreement to become t he exclusive licensee for the Speedo brand

as well. It is positioned as the Premium brand in India. The Company is engaged in the business of manufacturing garments. Therefore there is no separate reportable

segment. The Company is engaged in the business of “Manufacturing of Garments” . As the basic nature of these articles are governed by the same set of risk and returns,

these have been re-grouped as a single business segment. Further the company sells primarily in the domestic market where its operations are gov erned by the same set of

risks and returns and the overseas sales are insignificant. Accordingly the separate primary and secondary segment reporting disclosure as envisaged in Accounting

Standard (AS - 17) on Segmental Reporting notified by the Companies (Accounting Standard) Rules 2006 is not applicable to the company.

Manufacturing Distribution Marketing

Source: Company, FinExpertiseResearch

Source: Company Filings



C. Product Line of Page Industries Limited

Men's Innerwear

3D Innovations

Zone Stretch

Comfort Stretch

Gold Edition

Elance

Zone

Comfort Plus

Modern Classic

Boy's

Women's Innerwear

Active Bras

Essence Bras

Signature Stretch

Soft Wonder

Lace Stretch

Comfies

Simple Comfort

Sports & Leisure

Sport Performance

Sport

24x7 Stretch

Socks

Thermals

Mens

Women's



2. Financial Overview of Page Industries Limited

A. Common Size Statement Analysis –

a. Balance sheet Analysis

b. Profit & Loss Analysis



Balance Sheet 2007

2008

2009

2010

2011

Value %

Value %

Value %

Value %

Value %

Assets

Current Assets

Cash & Cash Equivalents 301.91 29.8%

1.75 0.1%

102.98 5.3%

29.53 1.1%

25.81 0.8%

Trade Accounts Receivables - net of Allowances 0 0.0%

0 0.0%

0 0.0%

0 0.0%

0 0.0%

Inventories 363.73 35.9%

573.85 40.6%

679.86 34.8%

945.50 35.8%

1647.16 50.1%

Other Current Assets 2.72 0.3%

7.76 0.5%

0 0.0%

0 0.0%

0 0.0%

Interest Accrued on Investments 0 0.0%

0 0.0%

0.96 0.0%

0.10 0.0%

0 0.0%

Sundry Debtors 55.76 5.5%

91.20 6.4%

169.90 8.7%

204.55 7.7%

258.46 7.9%

Loans & Advances 100.92 10.0%

327.71 23.2%

448.63 23.0%

688.80 26.1%

423.13 12.9%

Total Current Assets 825.04 81.5%

1002.27 70.8%

1402.34 71.8%

1868.48 70.7%

2354.55 71.7%

Fixed Assets

Property Plant & Equipment 245.75 24.3%

506.57 35.8%

698.48 35.8%

1012.98 38.3%

1258.93 38.3%

Accumulated Depreciation 58.11 5.7%

93.78 6.6%

148.58 7.6%

237.39 9.0%

328.39 10.0%

Property Net 187.64 18.5%

412.79 29.2%

549.90 28.2%

775.59 29.3%

930.54 28.3%

Other Non-current Assets

Total Assets 1012.67 100.0%

1415.06 100.00%

1952.24 100.0%

2644.07 100.0%

3285.10 100.0%

Liabilities & Shareholder's Equity

Current Liabilities

Short Term Debt 29.94 1.8%

0 0.00%

0 0.0%

100.00 3.5%

594.36 16.6%

Current Portion of Long Term Debt 0 0.0%

0 0.00%

0 0.0%

0 0.0%

0 0.0%

Trade Accounts Payable 0 0.0%

0 0.00%

0 0.0%

0 0.0%

0 0.0%

Accrued Expenses & Other Liabilities 0 0.0%

0 0.00%

0 0.0%

0 0.0%

0 0.0%

Income Tax Payable 8.35 0.5%

26.58 1.23%

16.80 0.7%

19.76 0.7%

25.56 0.7%

Total Current Liabilities 38.29 2.3%

26.58 1.23%

16.80 0.7%

119.76 4.2%

619.92 17.3%

Long Term Debt 223.30 13.6%

372.01 17.20%

194.89 8.3%

186.97 6.6%

404.82 11.3%

Other Non-current Liabilities/Provisions 27.72 1.7%

206.03 9.53%

391.30 16.7%

544.24 19.2%

78.40 2.2%

Deferred Income Tax Asset 0 0.0%

10.28 0.48%

0 0.0%

0 0.0%

0 0.0%

Preferred Stocks 0 0.0%

0 0.00%

0 0.0%

0 0.0%

0 0.0%

Share Capital 120.00 7.3%

120.00 5.55%

120.00 5.1%

120.00 4.2%

120.00 3.4%

Paid-in Capital 111.54 6.8%

111.54 5.16%

111.54 4.8%

111.54 3.9%

111.54 3.1%

Reserve & Surplus 565.68 34.4%

662.21 30.62%

756.68 32.3%

878.74 31.0%

1126.23 31.5%

Retained Earnings 114.73 7.0%

107.67 4.98%

94.46 4.0%

122.06 4.3%

247.49 6.9%

Total Common Shareholder's Equity 677.22 41.2%

773.75 35.78%

868.22 37.1%

990.28 35.0%

1237.77 34.6%

Total Liabilities & Shareholder's Equity 1643.74 100% 2162.40 100% 2339.42 100% 2831.52 100% 3578.69 100%

a. Common Size Statement Analysis –Balance Sheet

Source: Analyst’s Estimates, Company filings



Source: Company Filings, FinExpertise Research

P&L Statement 2007

2008

2009

2010

2011

Value %

Value %

Value %

Value %

Value %

Net Sales

1359.39 100%

1923.48 100%

2546.51 100%

3393.80 100.0%

4915.62 100%

Cost of Goods Sold

1028.21 75.6%

1378.42 71.7%

1680.95 66.01%

1636.38 48.2%

3305.64 67.2%

Gross Profit

331.19 24.4%

545.06 28.3%

865.56 33.99%

1757.42 51.8%

1609.98 32.8%

SG&A

182.92 13.5%

299.50 15.6%

356.77 14.01%

519.30 15.3%

706.06 14.4%

Operating Profit

148.27 10.9%

245.56 12.8%

508.80 19.98%

1238.12 36.5%

903.92 18.4%

Interest Income

4.71 0.3%

19.34 1.0%

29.70 1.17%

10.51 0.3%

8.2584 0.2%

Interest Expense/Bank Charges

(23.64)

(0.02)

(33.82)

(0.02)

(30.68) (0.01)

(29.74) (0.01)

(52.25)

(0.01)

Other Income

22.57 1.7%

25.50 1.3%

34.14 1.34%

38.09 1.1%

112.70 2.3%

PBT

151.91 11.2%

256.58 13.3%

541.95 21.28%

1256.98 37.0%

972.62 19.8%

Provision for income Taxes

88.76 6.5%

105.89 5.5%

152.09 5.97%

189.07 5.6%

292.35 5.9%

PAT

63.15 4.6%

150.70 7.8%

316.30 12.42%

396.10 11.7%

680.27 13.8%

Extraordinary loss (Income)

0.00 0.0%

0.00 0.0%

0.00 0.00%

0.00 0.0%

0.00 0.0%

Reported Net Income 63.15 4.6% 150.70 7.8% 316.30 12.42% 396.10 11.7% 680.27 13.8%

b. Common Size Statement Analysis – Profit & Loss Statement

Balance Sheet Analysis: Apart from in 2007, CCE was maintained under 1.5% of total assets till 2011, the variations seen were 29.8% & 5.3% in 2007 &

2009 respectively. The area of concern is the steady increase in the Inventories from 35.9% in 2007 to 50.1% in 2011; and also sundry debtors are seen

increased from from 5.5% in 2007 to 7.9% of total assets in 2011. Total current liabilities are 17.3% of total liabilities & shareholder’s equity in 2011,

which has 16.6% weightage of short term debt. Between 2007 till 2010, the figure remained under 4.5% range.

P&L Analysis: Cost of Goods Sold (COGS) have seen steady decline from 75.6% in 2007 to 67.2% of net sales in 2011. 2010 saw drastic fall in COGS on

account of a great fall in cotton prices, with COGS being 48.2% of total sales. In 2011, when the sales increased by 44.8% over 2010,but EBIT fell by

27.0% on account of cotton prices again moving up. PAT has increased consistently as percentage of sales from 4.6% in 2007 to 13.8% in 2011. They

have also controlled their Selling General & Administrative (SG&A) under 15.5% levels.



3. Historical Stock Trend Analysis

A. Price-Volume Graph

B. Indexed Stock Price Performance

/



A.Comparative Price-Volume Graph

B.Indexed Stock Price Performance Comparison Graph

0

5000

10000

15000

20000

25000

0

50000

100000

150000

200000

250000

0

500

1000

1500

2000

2500

3000

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

16-03-2007 16-03-2008 16-03-2009 16-03-2010 16-03-2011

PAGE Ind. Sensex

BSE – Price-Vol PAG:IN – Price-Vol

Source: www.bseindia.com


The stock has truly being a performer and has

beaten Sensex based on its strong fundamental

growth, which is showcased by its year-on-year

performance.

Fundamentally, we see the stock price to be INR

3609.15/- by 2013 end and INR 5,233/- by 2014

end.

Trailing P/E (TTM) being 26.81, while forward

P/E being 26.26.

http://www.bseindia.com/




4. Valuation - Page Industries Limited

A. Current Valuation

B. Adjusted Clean Numbers

C. Projections Snapshot



A. Current Valuation – PAG: IN

(INR in Mn except

per share data)

Stock Price

Current Value

Selected Balance Sheet

Items (31/03/2011)

Stock

Price(07

Oct'11)

2,452.8

Fully Diluted Shares

11.15

Cash

25.54

52

Week

High

2,772.0

Equity Value

27,357.66

Total Debt

1,149.58

52

Week

Low

1,211.0

Enterprise Value

28,481.71

Shareholders' Equity

1,237.77

CMP %(52-Wk

High)

Enterprise

Value

Enterprise Value Multiples P/E Multiple

M.Cap Sales EBITDA EBIT PE

LTM FY12(E) FY13(E) LTM FY12(E) FY13(E) LTM FY12(E) FY13(E) LTM FY12(E) FY13(E)

2,452.75 88%

27,357.66

28,481.71 9.60x 4.00x 2.76x 19.03x 14.79x 9.46x 20.37x 19.81x 12.45x 26.81x 26.26x 18.11x

Analyst

Estimates

Revenue

Net

Income

EBITDA

EBIT

2012(E)

7,127.6

5,785.2

1,926.3

1,437.9

2013(E)

10,335.1

8,388.5

3,011.3

2,287.2

2014(E) 14,985.9 12,163.3

3,638.3 3,638.3

B. Adjusted Clean

Numbers INR

Annual

Current

Stub

Previous

Stub

LTM

Adjusted Gross Profit 2506.91 967.09 506.87

2967.13

Adjusted EBIT 1024.87 511.58 138.29

1398.16

Adjusted EBITDA 1123.17 511.58 138.29

1496.46

Adjusted Net Income 720.59 374.48 74.73

1020.33

Adjusted Profi t for

Equity Holders 720.59 374.48 74.73

1020.33

Adjusted Basic EPS 64.60 33.57 6.70

91.48

Adjusted Diluted EPS 64.60 33.57 6.70

91.48

Trailing P/E 26.81

Forward P/E 26.26 Source: BSE, Bloomberg, Company Filings, Analyst’s Deductions

Page Industries Limited has the Enterprise Value of INR 28,481.71/- Mn. ,

with Market Capitalisation being INR 27,357.66/- . Since, EV & P/E multiples

decrease in the future, it clearly shows strong signs of growth of sales and

the resulting EBITDA, EBIT and P/E multiples.

Source: Analyst’s analysis

Source: Analyst’s estimates

Source: Analyst’s estimates

C. Projection Snapshot



5. Financial Review - Detailed

A. Historical & Projected Financial Analysis

B. Raw Material’s Analysis

C. Internal Liquidity Analysis

D. Operating Performance Analysis



A. Historical & Projected Financial Analysis

(INR in Mn, unless specified otherwise) 2007 2008 2009 2010 2011 CAGR 2012 (E) 2013 (E) 2014 (E)

Total Assets (Mn)

972.54

1,110.87

1,340.06

2,004.48

2,927.32

31.7%

Revenue

1,359.39

1,923.48

2,546.51

3,393.80

4,915.62

37.9%

7,127.64

10,335.08

14,985.87

Total Assets Turnover 1.40x 1.73x 1.90x 1.69x 1.68x

PAT

63.15

150.70

389.86

1,067.91

680.27

81.2%

5,785.18

8,388.51

12,163.34

Net Profit Margin 4.6% 7.8% 15.3% 31.5% 13.8%

14.6%

14.6% 14.6% 14.6%

Annual Rate of Growth in Revenue n.m. 41.5% 32.4% 33.3% 44.8%

Annual Rate of Growth in EBIT n.m. 65.6% 107.2% 143.3% -27.0%

59.1%

Annual Rate of Growth in EBITDA n.m. 64.4% 93.7% 124.5% -16.5%

56.3%

Annual Rate of Growth in PAT n.m. 138.6% 158.7% 173.9% -36.3%

81.2%

Annual Rate of Growth of Dividends n.m. 129.0% 70.0% 23.5% 23.8%

61.6%

Annual Rate of Growth of EPS n.m. 138.6% 158.7% 173.9% -36.3%

Gross Profit Margin 24.4% 28.3% 34.0% 51.8% 32.8%

EPS 5.66 13.51 34.95 95.74 60.99

34.2%

93.42 135.46 196.42

DPS 4.37 10.00 17.00 21.00 26.00

42.04 70.44 102.14

Payout Ratio 77.1% 74.0% 48.6% 21.9% 42.6%

52.9%

45.00% 52.00% 52.00%

P/E 52.30 30.87 10.30 8.34 26.64

25.69

Dividend Yield (%) 1.47% 2.40% 4.72% 2.63% 1.60%

Share Price (ending March-xx)

296.10

417.10

360.00

798.05

1,625.00

2,489.07

3,609.15

5,233.27 PEG Ratio n.m. 22.27 6.49 4.79 -73.40

Source: Analyst’s analysis, Company Filings

During 5-year duration from 2007-11, while revenue increased at CAGR of 39.9% , EBIT saw a increase of 59.1% . During the same period Net Income increased

by 81.2% . Due to steep increase in the stock price we see the dividend yield decreasing from 4.72% in 2009 to 1.60% in 2011. Payout ratio decreased from

77.1% in 2007 to 21.9% in 2010 before increasing to 42.6% in 2011.



B. Raw Material’s Analysis

2007

2008

2009

2010

2011

Description (in Mn) Value Value %(y-o-y) Value %(y-o-y) Value %(y-o-y) Value %(y-o-y)

Imported

Bra Accessories

6.66

29.16 337.6%

56.50 93.7%

37.61 -33.4%

91.34 142.9%

Elastic

-

- n.m.

- n.m.

- n.m.

20.9 n.m.

Labels

-

- n.m.

- n.m.

- n.m.

- n.m.

Yarn Socks & Elastic

-

- n.m.

- n.m.

- n.m. 41.8 n.m.

Total

6.66

29.16 337.6%

56.50 93.7%

37.61 -33.4%

154.04 309.6%

Indigenous

Yarn

332.74

391.12 17.54%

532.70 36.20%

884.77 66.1%

1333.62 50.7%

Woven Fabric

37.91

99.54 162.56%

106.31 6.80%

109.69 3.2%

184.99 68.6%

Elastic

73.96

61.36 -17.03%

36.29 -40.85%

38.61 6.4%

16.45 -57.4%

Consumables

-

4.42 n.m.

10.94 147.67%

27.22 148.8%

44.33 62.9%

Packing Materials

-

12.32 n.m.

13.75 11.55%

17.27 25.6%

294.77 1606.8%

Others 124.77 157.23 26.02% 205.65 30.79% 30.43 -85.2% 189.49 522.7%

Total

569.38

726.00 27.51%

905.6422 24.74%

1107.99 22.3%

2063.65 86.3%

Boughtouts

Indegineous:

Socks

13.19

9.84 -25%

15.5 57%

7.12 -54%

268.00 3664%

Readymade/Finished Garments 0 6.45 n.m. 0 n.m. 0 n.m. 0 n.m.

Total

13.19

16.29 24%

15.5 -5%

7.12 -54%

268 3664%

Grand Total 589.24 771.45 31% 977.65 27% 1152.72 0.179078 2485.69 116%


Apart from the increase in the imports of the Bra accessories, we see imports of ‘Elastics’ & ‘Yarn socks and elastics’. Since 2007 till 2011, we see great reduction

y-o-y in use of indigenous elastics with value falling from INR 73.96 Mn /- in 2007 to INR 16.45 Mn/- in 2011. There has been a phenomenal increase in indigenous

paking materials and those categorised under ‘other category’. Indigenous socks Boughtouts have seen approximate increase of INR 258 Mn/- in expenditure.



C. Internal Liquidity Analysis

2007

2008

2009

2010

2011

Value

Value %(y-o-y)

Value %(y-o-y)

Value %(y-o-y)

Value %(y-o-y)

Liq

uid

ity

An

aly

sis Current Ratio

21.55

37.70 75.0%

83.49 121.4%

15.60 -81.3%

3.80 -75.7%

Quick Ratio

12.05

16.12 33.8%

43.01 166.9%

7.71 -82.1%

1.14 -85.2%

Cash Ratio 7.88 0.07 -99.2% 6.13 9232.2% 0.25 -96.0% 0.04 -83.1%

Acti

vit

y A

na

lysi

s

Receivables Turnover Ratio

24.38

21.09 -13.5%

14.99 -28.9%

16.59 10.7%

19.02 14.6%

Average Collection Period (Days)

14.77

17.07 15.6%

24.02 40.7%

21.70 -9.7%

18.93 -12.8%

Inventory Turnover Ratio

5.43

4.62 -15.0%

4.72 2.1%

5.58 18.4%

11.27 102.0%

Days of Inventory Holdings (Days)

66.25

77.98 17.7%

76.35 -2.1%

64.50 -15.5%

31.93 -50.5%

Payables Turnover Ratio

9.71

7.89 -18.7%

11.61 47.1%

6.69 -42.4%

10.77 61.1%

Payables Payment Period (Days)

37.07

45.61 23.0%

31.00 -32.0%

53.85 73.7%

33.42 -37.9%

Cash Conversion Cycle (Days) 43.95 49.45 12.5% 69.37 40.3% 32.35 -53.4% 17.44 -46.1%

*Avg. Period = 360 Days

Page Industries Ltd had excess liquidity which was gradually trimmed to current ratio, quick Ratio & Cash ratio of 3.8, 1.14 & 0.04 respectively. Thus, it has

freed much of its cash. The management of credit has improved post 2009, resulting in reduced ACP (Average Collection Period) from 24.02 Days in 2009

to 18.93 Days in 2011. The company has good inventory management with days in Inventory holdings (DIH) are now down to 31.93 Days in 2011 from

76.35 Days in 2009. The has been about 46% reduction on the Cash Conversion Cycle (CCC) from 32.35 Days in 2010 to 17.44 Days in 2011.




D. Operating Performance

Description 2007

2008

2009

2010

2011

Value

Value

% (y-

o-y)

Value

% (y-o-

y)

Value

% (y-

o-y)

Value

% (y-

o-y)

Op

era

ting

Eff

icie

ncy Total Asset Turnover

1.34

1.36 1.3%

1.30 -4.0%

1.28 -1.6%

1.50 16.6%

Net Fixed Asset Turnover

7.24

4.66 -35.7%

4.63 -0.6%

4.38 -5.5%

5.28 20.7%

Equity Turnover

2.01

2.49 23.8%

2.93 18.0%

3.43 16.8%

3.97 15.9%

Receivables Turnover Ratio 24.38 21.09 -13.5% 14.99 -28.9% 16.59 10.7% 19.02 14.6%

Op

erati

ng

Pro

fita

bil

ity

Gross Profit Margin

24.4%

28.3%

34.0%

51.8%

32.8% Operating Profit Margin

10.9%

12.8%

20.0%

36.5%

18.4%

Net Profit Margin

4.6%

7.8%

12.4%

11.7%

13.8%

Retu

rn o

n

Inv

estm

en

t (R

OI)

Return on Total Assets

9.76%

17.35%

26.06%

46.83%

27.52% Return on Net Assets

52.7%

59.5%

92.5%

159.6%

97.1%

Return on Owner's Equity

187.9%

240.4%

188.7%

189.3%

225.3% ROE

9.3%

19.5%

36.4%

40.0%

55.0%

ROI- Before Tax

16.0%

18.0%

35.0%

71.9%

52.5% PAT/EBIT

0.43

0.61 44.1%

0.62 1.3%

0.32 n.m.

0.75 135.2%

Better utilisation of assets have resulted in the higher total asset turnover ratio which recovered from the low of 1.28 in 2010 to 1.50 in 2011. Net Fixed

Assets Turnover improved by 20.7% from 4.38 in 2010 to 5.28 in 2011. NPM saw the gradual increase from 4.6% in 2007 to 13.8% in 2011. Gross Profit

Margin saw increased to 51.8% in 2010 as compared to 34% in 2009. Although the higher ROI in 2010 is very much attributed to the low cost of raw

matrials, the 2011 figure justifies its srong performance as it is above those of 2009 and the preceding years. Before Tax ROI has increased to 52.5% in

2011 from 16% in 2007.




6. Risk Analysis - Page Industries Limited

A. Financial Risk Analysis

B. Business Risk Analysis



A. Financial Risk Analysis

2007

2008

2009

2010

2011

Value %(y-o-y)

Value %(y-o-y)

Value %(y-o-y)

Value %(y-o-y)

Value %(y-o-y)

Financial Risk Analysis

Levera

ge A

na

lysi

s

Debt-Equity Ratio 0.33 n.m.

0.49 49.8%

0.22 -54.6%

0.19 -15.9%

0.33 73.2%

Long Term Debt / Total Capital Ratio 0.37

n.m.

0.75 101.5%

0.68 -9.6%

0.74 9.4%

0.39 -47.1%

Total Debt Ratio 0.31 n.m.

0.45 44.8%

0.41 -8.2%

0.49 19.2%

0.64 29.7%

Receivables Turnover Ratio 24.38 n.m.

21.09 -13.5%

14.99 -28.9%

16.59 10.7%

19.02 14.6%

Capital Equity Ratio 1.33 n.m.

1.49 12.4%

1.22 -18.0%

1.19 -2.9%

1.33 11.6%

Interest Coverage Ratio 6.27 n.m. 7.26 15.8% 16.58 128.4% 41.63 151.1% 17.30 -58.4%

Ca

sh F

low

Co

vera

ge

An

aly

sis

CF / Long Term Debt Ratio 0.36 n.m.

0.21 -42.1%

0.54 155.4%

0.41 -24.2%

-0.003 -

100.8%

CF / Total Debt Ratio 0.32 n.m. 0.20 -37.3% 0.52 164.1% 0.35 -33.0% 0.00 -

100.4%

So

me m

ore

Inso

lven

cy

Test

Ra

tio

s Working Capital/Total Assets 0.78

0.69

0.71

0.66

0.53 Cash/ Current Liabilities 7.88

0.07

6.13

0.25

0.04

Retained Earnings/Total Assets 0.11

0.08

0.05

0.05

0.08 Working Capital/Sales 0.58 0.51 0.54 0.52 0.35

Source: Analyst’s analysis,

The lenders have financed 64% of assets in as per 2011 figures, up from 49% in 2010. Due to increase in Debt financing, we have seen ICR (Interest

Coverage Ration to fall 41.63 times in 2010 to 17.30 times in 2011. Better management of Working Capital have resulted in the Working Capital to be 53%

of the total assets in 2007, down from 78% approx. in 2007. The company has freed any excess cash, leading to better management of resources.



B. Business Risk Analysis

Business Risk

Op

era

tin

g

Ea

rn

ing

's

Va

ria

bil

ity

Standard Deviation of Operating Earnings

457.49 Mean Operating Earnings

608.93

Coefficient of Variation of Operating Earnings 0.75

Sa

les

Va

ria

bil

ity Standard Deviation of Sales

1390.366

Mean Value of Sales

2827.76

Coefficient of Variation of Sales 0.49


Page Industries has high Coefficient of Variation of Operating Earnings of about 0.75; while that of Sales is 0.49 only.

This primarily due to the impact of Raw Materials and the changes in their prices involved.



7. Growth Analysis - Page Industries Limited

A. Key Growth Statistics

B. DUPONT Analysis

C. Stock Projections



A. Key Growth Statistics B. DUPONT Analysis

Growth Analysis

2007 2008 2009 2010 2011

Value Value Value Value Value

Retention Rate

0.23 0.26 0.51 0.78 0.57

ROE

9.3% 19.5% 36.4% 40.0% 55.0%

Total Asset Turnover

1.34 1.36 1.30 1.28 1.50

Equity Turnover

2.01 2.49 2.93 3.43 3.97

Net Profit Margin

4.6% 7.8% 12.4% 11.7% 13.8%

Sustainable Growth Rate (%) 2.13 5.06 18.71 31.23 31.53

B. Stock Projections

(INR in Mn, unless specified otherwise) 2007 2008 2009 2010 2011 CAGR 2012 (E) 2013 (E) 2014 (E)

Gross Profit Margin 24.4% 28.3% 34.0% 51.8% 32.8%

34.2%

DPS 4.37 10.00 17.00 21.00 26.00

0

42.04 70.44 102.14

Payout Ratio 77.13% 74.0% 48.6% 21.9% 42.6%

52.9%

45.0% 52.0% 52.0%

P/E 52.30 30.87 10.30 8.34 26.64

25.69*

Dividend Yield (%) 1.47% 2.40% 4.72% 2.63% 1.60%

DU PONT ANALYSIS 2007 2008 2009 2010 2011

EBIT/SALES 0.11 0.13 0.20 0.36 0.18

PBT/EBIT 1.02 1.04 1.07 1.02 1.08

PAT/PBT 0.42 0.59 0.72 0.85 0.70

ROE 9.3% 19.5% 36.4% 40.0% 55.0%

We are projecting the Dividend per Share of INR 102.14, INR 70.44 42.04 in 2014, 2013 and 2012 respectively. Dividend Yield appears to be decreasing

on account of th stock prices moving up sharply.

Source: Annual Report 2010-11


Page Industries has has seen marginal increase in sustainable growth rate

in 2011 of 31.53% as compared to 31.23% in 2010.

Although, the DUPONT figures reflect 55% ROE in 2011, the PAT/EBIT

showed lower esults as compared with 2010 figures.


*Average Value



8. Profile - Page Industries Limited

A. Shareholding Pattern

B. Management Profile –Board Composition

C. Contact Details



A. Shareholding Pattern

Promoter & Promoter Group Public

Indian Foreign

Institution FII DII

Non Institution Body Corporate 22,32,320 4466305 38,05,123 15,36,362 22,68,761 6,50,126 1,08,934


Source: Company Filings

Promoter &

Promoter Group 44% Public

56%

Macro View

Institution 46%

FII 18%

DII 27%

Non Institution 8%

Body Corporate

1%

Subdivision - Public Holdings

Indian 15%

Foreign 30%

Institution 25%

FII 10%

DII 15%

Non Institution 4%

Body Corporate

1%

Entity-wise




B. Management Profile - Board Composition

C. Contact Details

Registered Address

6/2 & 6/4, Abbaiah Reddy Industrial Area, Jockey Campus, Hongasandra, Begur Hobli, Bangalore 560068

Telephone +(91)-80-25732952 Fax +(91)-80-25732226 Email [email protected]

Website www.jockeyindia.com

Chairman & Independent

Director

Mr. Pradeep Jaipuria

Managing Director

Mr. Sunder Genomal

Non-Executive Directors

Mr. Ramesh Genomal

Mr. Nari Genomal

Mr. Timothy RalphWheeler

Independent Directors

Mr. G P Albal

Source: Annual Report 2010-11

mailto:[email protected]

http://www.jockeyindia.com/



About The Analyst:

Firms*

•ARC Financial Services •RMJ Commodity Pvt Ltd

•S R Bagai & Company

•South Asian Stocks Ltd

Institues*

•Amity University •ARC Academia

• IREF

•RMJ Institute of Capital Markets

Profile:

Rajat Dhar is an Investment Banking Analyst who holds a Bachelor of Engineering Degree from University of Pune, and has done PGDM in Marketing. He started his career as a banker in HDFC Bank Ltd and subsequently moved into Wealth Management space in HSBC. He has approximately 3.5 Years of Banking & Wealth Management expertise. He is IRDA & AMFI-Dealer’s Module certified. He has undertaken rigorous

training in Financial Modelling and Investment Banking at ARC Academia, India Office of Wall St. Training Institute – New York.

Key Expertise:

He is an independent Investment Banking Analyst with expertise in Oil & Gas segment.

His core specialities include Financial Modelling / Equity Reports / Company Reports / Sector Reports / Transaction Advisory / Trading Comparables /

DCF Valuation / Pitch Books / Equity Portfolio Management / Financial Planning & Advisory.

He is a visiting faculty at Amity University, and has co-chaired many panel discussions with latest being “The paradigm shift in Financial Markets post

liberalisation of 1990s, and its impact on Global Markets”. His research reports are also published at Thomson Reuters.

His works are publically available at: http://www.fixexpertise.blogspot.com

He is associated with a couple of firms / institutes of repute.

*Arranged in Alphabetical Order

http://www.fixexpertise.blogspot.com/



Contact Details

Analyst: Rajat Dhar

FinExpertise – Research & Analytics

For more copies or other information, contact

Institutional/Retail: Rajat Dhar

Phone: + (91) 9999.760.359 E-mail: [email protected] Blog: www.finexpertise.blogspot.com

FinExpertise, 3rd Floor, Malviya Nagar, New Delhi 110 017.

Disclaimer

This Report is based on data publicly available or from sources considered reliable by the Analyst. However, the Analyst does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. The Data / Report are subject to change without any prior notice. Opinions expressed herein are

our current opinions as on the date of this Report. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. Analyst especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This document does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The views expressed may not be suitable for all investors. This information is strictly confidential and is being furnished to you solely for your information.

This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state , country or other jurisdiction , where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Research An alyst to any registration or licensing requirements within such jurisdiction. The distribution of this document in certain jurisdictions may be restricted by law, and persons in whose possession this document comes, should inform themselves about and observe, any such restrictions.

The information given in this document is as of the date as mentioned in the report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. Analyst reserves the right to make modifications and alterations to this statement as may be required from time to time. However, the Analyst is under no obligation to update or keep the information current. Nevertheless, the Analyst is committed to providing independent and transparent recommendation to its client and would be happy to provide any information in response to specific client queries. The Analyst shall not be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from

or in connection with the use of the information. Past performance is not necessarily a guide to future performance. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the market, subject company or companies and its or their securities. Copyright (c) 2011 Rajat Dhar

We are Launching a fully dedicated website for Research & Valuation in a week’s time by

25Th Oct’11, hosting scores of Research Reports. Stay in touch.

http://www.finexpertise.blogspot.com/

Page Industries Limited

Self Improvement