Page industries

[dumboinvestor]

@ashish.iit again you dont understand. I said “if” why dont you swap the name of page with another company. It is a mere assumption to illustrate the importance of roce that many dont take into account. I have said time and again that if page grows at 20% with a roce of 60% and trades at 20x whereas a peer grows at 20% with a roce of 30% but trades at a pe of 10. People will call page expensive and overvalued. Truth is a higher roce means that page will generate more cash than the other company and create more shareholder value. Please try to understand. Im not saying that page will deploy all its capital.

Ultimately a business that generates more cash is more valuable than a business that can merely report profits. Bull market investors will not understand this because most look at P&L and rev growth.

Very few keep an eye on cash conversion. Its easy to report numbers. Page does not have to deploy lots of cash to grow. Please understand that is a large part of the reason as to why consumer cos get these valuations. To put it simply “Quality of reported earnings”. Let page hoard up cash on the balance sheet, at a future date they will invest or do something else who knows! Truth is I cant deploy capital at even half of that number. So let the cash stay with page. I dont want a dividend, what will I do, get a MF return? Page will do that anyway through their investments…

Please try and understand where a person is coming from.

I have time and again stated that page is expensive. I state “views?” at the end of posts these days, hence open to counter. As long as one makes sense. It is hard for me to tell someone not to buy those three companies (or many more like HDFC bank etc etc etc) when they are buying RE cos and infra cos without even understanding the cycle. And best part is that people think 15% cagr is a low and tepid cagr…

I have refrained from these conflicts after a few of my previous posts. That can be easily seen. I will delete this after 48 hours. Lets stick to the subject.

P.S many may know the cycle, but it is clear that not many end up making money as they cant time the exit. Or some even enter at peak cycle. However, In a few years time, after the RE cycle is playing out (I personally believe it will and quite a bit will be made in the cycle) godrej prop will be considered a safe haven bluechip and it may well be… I dont know…maybe they end up being a structural story in a cyclical space…

P.P.S It makes sense to use simple examples of companies everyone knows and understands… I have not once mentioned HDFC bank or a Gruh in any post…

[amishra]

Ref mosl wc 2018 report, Above 40% RoE doesnot yield any incremental benefit to stock price. Growth is all that matters. Rather A balance of growth and efficiency is desirable. 10% growth is a shocker. I wonder are people not wearing innerwears these days😁

Also speedo that is swimwear don’t have repeat sales. Is it that due to price increase volume fell. Or other brands are pushing better retailer margin. Is it one off quarter or will be the new normal. What is the root cause that should be the focus of our discussion… We should stick to thread theme.

Quality deterioration is subjective… I don’t think it matters a lot. At the end of the day, are Rupa lux dollar dixy extremely uncomfortable to wear I doubt.

[gautham1]

Its one of those companies that doesnt do con calls. (Relaxo, Ajanta pharma, Kajaria and Gruh ). So we dont know the reason for the slow growth.
The last time we saw such a price reaction was in 2016 when they reported < 20 growth for the first time.
I dont know about the valuation. But this is the only company ( outside Banking/NBFC) that has done a double digit sales and profit growth consistently for several years now. Thats quite an achievement. On the other hand we have so many other companies ( even the high quality ones ) with erratic sales/profit growth. Some of the common excuses we hear (in their con calls) are GST disruption, demonetization, kerala flood, poor consumer sentiment, crude oil, rupee depreciation, poor monsoon, power cut, worker strike, raw material inflation.

[dd1474]

Increasingly finding discussion on thread not related to business and more about experience sharing. While not saying that personal experience shall not be shared, just imagine even 500 members of multi-thousand members start sharing their experience on thread. Will request all members to write with business perspective in mind. This is not Jockey product review website. Let us discuss business and valuation then our personal experience. If a new person start reading thread, it would be very painful. Request all to answer question what my post add to this thread from investment perpective? If it does not answer positive, avoid putting post on thread. This is my request. Today started reading the thread and find hardly 3-5 of 40 message making investment sense. Apology for being harsh but it is needed with the flood of messages we are getting across threads, particularly after decline in price of company.

Discl: I have tracking position and no change in last 2 years.

[spatel]

Some data to chew - volume (in '000) and average realization (INR/unit):

Page Ind Volume and Realization.pdf (176.0 KB)

Source: MO report here and here.

[amishra]

Sandeep well done man. That’s a bang on report. Thanks.

Although I could not make much sense except the fact that, Q1 is disproportionately high which has skewed the pattern. Averaging or normalising across H1, looks OK.

Realisation has surely increased. That’s might impact sales but let’s accept, its not easy to increase prices in this competitive market so easily. Only companies commanding brand pull dare to do that… Overtime this might be a better move in increasing revenue and profit margin as and when volume catches up.

More feedback and analysis welcome!

[MHS]

Guys just relax.Over Analysis is not required here.

My 2 cents:

A few quarters here and there slow growth is not going to rattle this business.

This is a secular growth story and it will continue as long as people wear undies, may be now at little less pace as the size is increasing.

This is tremendous business and the little known Genemols grown this Jockey franchise from a little unknown name to a mega brand. Jockey India under Genemols made Jockey the best franchise and probably the best performing one in the world.

If u have patience go through the thread and read and reread about valuations, why Q1 >Q2>Q3>Q4. This was discussed “N” numbers of times. Every time new investors come and start the same topic and want to over analyze. No offense please.

I request all who are writing here please read the thread at least once before writing and add value which is unknown here.

If u r not invested and want to invest just take a dip and weight for valuations to cool down or bad event to add more, if u r invested just enjoy the wealth.

Warren Buffett’s fruit of loom shut shop in India few years back and not able to compete the Genemols.

We have very very few businesses in India which are secular and credible management with no fuss absolutely no fuss, just pure earnings and numbers to show and it will trade at primium valuations u like or not.

PS: Sold Page 3Years ago and watched only to see the Business growing from Strength to Strength and of-course the Price. Simple words it’s a wealth creator and it will be. And by the way was using their products from 15 years.

Oh …my longest post on VP.

[bheeshma]

Good raw data shared by @spatel

Looking at the data , i could organize some thoughts as under

The branded innerwear/leisure wear category led by Page is clearly characterized by the ability to increase prices - which is the main reason for the high return ratios exhibited by Page and others in this sector. The following table illustrates this

Segment	Average yoy growth in price realization
Men innerwear	7.6%
Women innerwear	6.7%
Leisure wear	5.0%

Pricing power in the Page Mens innerwear segment has in fact increased with the passage of time. The recent TTM increase in realization has been Rs 14 per piece in inner wear

I dont see any immediate threat to the pricing power, whether in Mens/Women/ Leisure wear. However, because Women and Leisure are having higher realizations per piece, the % of price increased yoy per piece will be lower. On an average Page increases prices by Rs 2 per piece per quarter across all segments

The effect this has is that it slows down growth rates, as the base realization increases. However, there is no loss in pricing power which continues as before

The other important trend is the unit volume growth. Over time , the % of mens innerwear has come down in the overall revenue compared to women + innerwear. From innerwear contributing to 63% in Q2 2015, it now contributes 56%.

44% now is contributed by Leisure and Womens and it looks that in a few more years this proportion will cross 50%. Ofc when it does that, growth rates will increase.

This is the average yoy in volume over the lookback period

Segment	Average yoy growth in volume
Men innerwear	7%
Women innerwear	13%
Leisure wear	16%

My sense is that mens innerwear volume growth is slowing down however pricing remains robust as ever. The co has a growing additional stream with good volume growth and relatively less pricing power. Overall, i think that the growth moderation is a temporary phenomenon as the underlying math plays out. 18% growth long term growth looks doable to me.

Best
Bheeshma
Disc- not invested

[HIMSHAH]

Fruits of looms again started in India… just update.
Disc
Not invested in page but tracking as I have investment in premco which supplies to all brands jockey or Hanes or Roopa , lux or dollar . People wear any but it’s sticking to waist as premco has supplied elastic:joy:

[HIMSHAH]

Plenty of new brands coming to India. As the sector is becoming very attractive. I don’t know will they affect page in future or not . But premco guys were saying that quality of products improving very much.

[abhijain]

nice data presentation.
There is one more aspect which is going to make nice growth - online.
Mr Genomal in his last interview said clearly that he is looking to expand in female undergarments and online presence
Online is just 3% of their overall pie which they expect to take to 10% in couple of years.
The growth looks intact going forward.
This was just a temporary bad quarter i must say.

[HIMSHAH]

Can anyone find out the “jockey USA original “ , which they sell in India is made in India or actuall USA made. And how much is sales of it . If it’s imported then dollar may be culprit and they may not have passed on cost increase .?

[mrai74]

Page Industries’s lofty valuations get a reality check in Q2

[dumboinvestor]

The article states that growth for the next 1 year is factored in. The thing with high quality companies is that they are discounted for 1-3 years. Depending on growth projections. Post that upside begins for investors. So over a 5-7-10 year period you end up seeing solid upside with a wonderful terminal value attached to the company as well. They also go on to state that volumes had fallen etc etc: And that Aditya birla fashion are scaling up inner wear big time for men and women so pages scorching growth continuing looks difficult. However the article also goes on to say that they expect growth to continue for page due expansion in distribution and newer products. The late festive season is blamed for the drop in volumes. But here is the kicker… PAT growth came almost completely from higher realizations, what does that show? Pricing power, something that the others dont have in comparison to page…

Page continues to be a trophy stock but just like anything company, over valuation has to be trimmed off in the short run… I continue to believe that 18-22k is a solid level to buy/average for new investors.

Long haul investors need not worry about these things, Bulk of India is yet to use jockey products and they would much rather wear jockey than AB fashion inner garments. Valuations are being checked so that is great for the serious long term investors… I think valuations need to be discounted for a 18% pat growth maximum. Assuming a higher number than that will most likely result in these sorts of corrections…

P.S dont flag this. If it was from another id Im sure VPers would not flag it…

[edwardlobo]

I think Aditya Birla signed up with Calvin Klien

[amitbansal01]

Dear friend… can you please seriously look into the tone of your posts ? This community (be it the senior members or the newer investors) all are trated equally and with respect… humble request to please refrain from using condescending tone in your posts… not the first time it is being pointed, but it your posts are seriously sticking out like a sore thumb in a otherwise civil forum…

[pradip]

Yes, totally agree. We are not here in this forum to score brownie points and silence anyone who disagrees. Put differently, there are some really good points you are trying to make, the un-necessary aggression is not helping you make them

[thecroc]

let’s talk about why in last 3-4 years PE multiples of consumer companies expanded suddenly. If we can handle that question we can talk about buying all of these- BTW I too own some of these consumer names but never preach incessantly about the virtues , coz who knows you paid for Bit more than next 15 years. It’s a bet until we answer why PE expansion is the new found asset class in consumer companies.
My feeling is this - patience is another asset , and when that runs out waiting for growth , PE contraction is going to happen at a faster pace than growth just like the expansion happened. I am brutally out in such scenarios and recommended everyone to do the same - no preaching. Since 0*100 is also 0 , capital preservation is primary duty.
Let’s wait for earnings and keep the meter of patience running.

[homemaker]

For Page Industries, the Only Credible Competition Can be Ourselves: Sunder...

[kb_snn]

You may like to read about NIFTY 50 stocks of 1972 … https://medium.com/@equityschool/nifty-fifty-stock-bubble-of-the-seventies-is-there-a-similarity-with-today-s-market-34b19d7a4cff

These all companies in NIFTY 50 were market leaders in their field , HIGH ROCE companies and Gr at very high growth rates but quoting @ > 40 X PE …

By 1973 most of companies lost 50% to 90% of value …

Avon was close to 140 in mid-1973 and under 20 by the Fall of 1974 (and what a Fall it was).
Disney dropped from 210 at the end of 1972 to 31 less than two years later.

Others companies that suffered were P&G , Coke , IBM , Gillette etc …

For example - P&G price of 1973 was crossed only in 1985 ie for 12 years stock gave zero or negative returns