Hi Donald,
Have a look at Kewal Kiran. Prof is at it again…
Hi Donald, is it worth converting to page at this stage? Non page retailers switching to pagecan be considered as growth reaching saturation.Have you not noticed quality of jockey is going down every year? Upmarket class has already switched over to other brands.Over exposure sometimes dilutes brand strength and I feel page is falling victim to it.Swimwearcategory is really not big enough in India to maintain historical growth rate of page if undergarments taper out.Whatever said about price anchoring ultimately all stocks have to face reality one day, it is a fact.Also have you considered risk of thin volumes.If couple of big investors turn hawkish on this stock lack of liquidity may push it down to much lower levels.(similar threat is faced by hawkins investors all the time).What I feel overall that party may be over…
Regards
Prasad kulkarni
Hi Prasad,
Though the question is addressed to Donald, could not help barging in…
Regarding quality…if you are talking about the entry level product it may be true. But I think they are very smartly converting entry level users to higher quality products in their own basket. There is a wider variety in their stable now and sales figures show no signs of slow down. If penetration level is measly for branded inner wears then more and more stores converting to Jockey may not mean saturation. There is huge opportunity size even now and they haven’t even done anything in women’s wear and kids wear, the journey has just began. Even if swimwear is not a big opportunity the others are huge - men’s, women’s and kid’s inner-wear, casual wear (inside the house including sleep-wear), yoga wear, sport-wear, thermals…
I am only making a case for growth potential and am not telling Page is a great investment at current valuation. I think prolonged staggered buying like Donald mentioned is a good approach here.
Cheers
Vinod
As per Mr. Genomal only 15% penetration in men and around 4% penetration in the women category the scope for expansion is immense. — In Page AGM
Rest all is on individuals to conclude…The debate of it being costly is going on since then.
Disc: I hold since 2009
I dont know, if many people realise this.
Sales of Page Women Segment is more than Turnover of Loveable.
and look at the cult brand being created
Shankar I did similar exercise in pune in atleast dozen different jockey stores for last fifteen days at various times in a day.(ended up in picking up a pile of socks) and found same thing.Most of the time the shop is empty and shop owners are chitchating with each others.One guy infact told me that he would have made more money if he had bought page shares rather than setting up a shop. Infact considering rentals involved he was making very less money.
The point is inspite of potential there is something called ground realty.If the growth tapers out we may see a PE derating in page and people who get in at these valuations
may not make any substantial returns.I am not talking about some one who has invested much earlier.
Dear Prasad,
You have picked an year old post to justify your point. The stock is up 50%+ since then. I really wonder while you are positive on a no-grower(Hawkins), you tend to be negative on a great growth stock(Page) which is very consistent.** I won both since last 4 years.**
While doing a scuttlebutt sample taken is very important. It’s difficult to conclude your opinion based on a single shop owner’s comment when there is a huge distribution network.
**Please speak to the youth of today about Jockey brand and you will see the result. I think that should be good enough pointer for the brand strength.
**
**Some data from their website: **“Page Industries commands wide spread pan India distribution encompassing over 23,000 plus retail outlets in 1,200 cities and towns and has revolutionized the innerwear market by launching exclusive JOCKEY outlets across India numbering 79 as of September 2012.”
Regarding store being empty, I too have observed the same. But the same holds true for clothing oultes like allen solly, peter eng, pepe, van heusen etc. they are worse. i wonder how they survive. but remember page products are available in smaller shops. i think thats where the bulk of the sales comes from. also, allen solly, pepe kind of outlets sell jockey.
(recently i was in a levis store to buy jeans. the salesman pushed me to buy levis underwear. i told him i buy only jockey. he said even he wore a jockey and showed me the jockey logo by pulling his pants down 
and insisted on trying levis out… i laughed and walked out. this tells the jockey brand recall )
**
Guys I am from Pune but I have temporarily moved to Chennai to study in a college. My hostel has close to 500 students and everytime I walk in the corridor, all I see is jockeys hanging around everywhere. I think that if students who live on stipends of 8000 per month buy Jockey, that says something about the brand. I agree that the market is immense.
I have also seen stores empty many times but then people dont spend half an hour buying undergarments. The choice is fairly simply find your size, type and pick a box or 2 or 3. So people come in, buy what they want and leave in 5 mins. Buying a shirt for example is more tricky. You go in, look at like 10 shirts, take time to choose the right colour, fit etc. And still many times, people dont buy anything. So although you see many people in other showrooms, you may feel like there is good crowd, but the billed sales are less. I saw this phenomenon in some malls in Indore. I saw them always crowded but came to know from shopowners that they are thinking of closing shops because people come, look around and leave.
About quality, I tried some other brands like Hanes and fruit of the loom just for the heck of it and I think Jockey is 10 times better.
Like Donald, I am always on lookout to grab Page when price comes down. If you look at the AR of Page, they are expanding production capacity. This year sales jumped but the inventories and trade payables have seen a huge uptick.
Please**
well, i order all my jockeys online!(from Inner wears to shorts to tees & its same with guys in my apt).Increasingpresence of online retailersmaybe reason why shops have less footfalls.Also, i read in ET,BusinessStandard sometime back that people are shifting to online retailers for buying innerwearsmainly due to availability of more options, convenience, discounts and embarrassment of asking sale person of other design(esp female customers.
consistent. years.
** Please
**
Some **
"Page JOCKEY
Dear Raj,
The reason Iam more positive about hawkins than page is that possibility of near term return is more in hawkins than page.Hence positiveness is relative.I do not think page can be a three bagger in next three years from here but hawkins has that potential.Page definately can be a good 15 to 20% year on year grower from here on but we have so many stocks in liquid universe capable of doing that.Hence why take liquidity risk.My whole point is that if one is taking liquidity risk by investing in hawkins or page at this level why not to opt for possibility of better returns.
Regarding empty shops I really went to various shops and talked to owners and that is what the findings are.There is no question of justification.Since I am investing my
hard earned money the only person I have to give some justification is myself.Hence though expressed in public forum these views are purely personal.But at the same time they are honest and all my stock holdings really reflect my thoughts and convictions.
Another point I am worried is that getting drawn in sucker rallies.We have all seen them. Bhel,L& T, SBI when were trading at peak valuations people were still hoping for more to come and longing for ELEPHANTS TO DANCE. But for a common man they do not…
You talk to any analyst about page now a days and you get fancy targets of 10000 and 15000 and and almost everybody is in agreement.This worries me a lot and past experience warrants caution.
Regards
prasad
**
Dear Prasad,
I am in sync with you on the comparison between Hawkins and Page with respect to short term returns. However, Page will be a great compounding story which I feel. The brand recall is somewhat awesome. The youth are simply crazy about it.Also, they are transforming themselves into a much stronger lifestyle company than a simple undergarment company.
Also Speedo could be a much bigger revenue generator in next 5 years.
As far as the valuation is considered, it was always expensive in relative terms and may remain so. I am hanging on and will add more on declines.** I will consider moving out only when I see the sales growth starts tapering, which in my opinion is years away.**
Regards,
Raj
Here is some work from my side on the market size , growth potential and few other things for next decade to help give direction to the discussion we are having on page in Bajaj Corp thread. Request friends to shift thediscussionhere and make it easy for other's to follow the discussion in relevant thread at a later date:
| Total Innerwear Market Size = USD 4Bn (19200 cr USD~48Rs) |
Men's IW | Women's IW | LeisureWear | |
|---|---|---|---|---|
| 1. | FY13 Market Size | 7872 cr. | 11328 cr | Data Not Available |
| 2. | Growth projectedfor next decade as per AR (by BCG) | 9% | 14% | DNA |
| 3. | Projected Market Size at end of decade if the above growth assumptionis proved correct. |
18635 cr | 42000 cr | DNA |
| 4. | Page's FY 13 revenue | 463 cr | 165 cr. | 216 cr. |
| 5. | FY'13 Market share | 5.8% | 1.5% | DNA |
| 6. | Best Case Revenue - Page does 30% growth overnext 10 years in all segments |
6382 cr. | 1530 cr. | 3000 cr. |
| 7. | Projected Market share if best case happens | 34% | 3.6% | DNA |
| 8. | Base Case Revenue - Page does 20% growth overnext 10 years in all segments |
2866 cr. | 1021 cr. | 1337 cr. |
| 9. | Projected Market share if base case happens | 15.3% | 2.4% | DNA |
Comments on above data:
Best Case(Col 7):
- Market share of 34% in men's innerwear over next decade looks difficult to achieve, given that so many MNC's are already jumping in and many more will come, quite possible that Indian men will be spoilt for choice in innerwear segment. If i remember correctly, I have personally experienced aggressive push by Levis (in Levi's store) & Lacoste. And of course there is Calvin Klein, Hanes, Tommy Hilfiger to name a few who are all eyeing this lucrative market.
- At the same time 3.6% market share in innerwear segment looks very to easy to me. We can track if Page does better in this segment than others.
Leisurewear is the big joker in the pack. They are already earning 46% of what they earn in mens innerwear without much fuss about it. In my personal experience, they have regularly increased their SKU's in this segment. And have stuck to their philosophy of mostly sticking to things where designs don't go out of fashion. like plain round neck casual t-shirt, shocks, shorts, thermals , track pants etc etc.. Not sure, if this segment can grow at 30% for long, but given that they are constantly adding new product range, high chance.
And here is a table presenting 10 forward revenue,profit and possible mcap scenario's.
| Col 1 | Revenue | Profit | PE | Mcap | Growth CAGR from current Mcap |
|---|---|---|---|---|---|
| Best Case | 12000 cr. | 1550 | 30 20 16 |
46500 31000 24800 |
25% 20% 17% |
| Base Case | 5400 | 690 | 20 15 10 |
13800 10350 6900 |
10% 8% 3% |
This is just an academic exercise for amusement :)
That disclaimer aside,i think there will be periods of doubt's on the story along the way, like a bad quarter, rumor of consumption story over, general market worry on stretched valuation etc.. giving opportunity to believers to load up more. And if the eventually the story turns out true, returns can be magnified a bit more for those believers.
Along the way, their will be a good 1-2% dividend yield to be collected too, adding to the returns.
2 Likes
Nice exercice, Raja
Thanks Ayush it’s a very simplistic one.
In this thread, and few other thread, people have advocated the overvaluation of page at a pe of 40.
I feel page at 40pe, and ~45+% dividend payout (1.1% yield) is as expensive as any other stock with same growth profile (that is 30%+ cagr) and same dividend yield (irrespective of pe of the stock). This theory is very well explained in this super awesome vidoe
At the theoretical pe of 10, the dividend yield of page will be ~4.4%*1.3=5.72%. The day when page will be available at such high dividend yield, be assured the rest of the stocks will be in double digit loss, and many of us will be out of market :).
** (irrespective stock). **[
http://www.youtube.com/watch?v=EyRlrjl4eKE 
.
Page being costly debate is going since 2009 itself. While the so called cheap stocks became cheaper, page continues be a 7 bagger in less than 5 year.
One need to look at the increasing E(Earning) in P/E rather than just the P/E. That’s the only mantra of making money I have learned in last 4 years.
Visibility or Certainly of increasing E is the key point here. That’s what was on my mind while bringing out the scope of opportunity (Market size) into picture. While on the surface it looks like Page is already a market leader and probably can’t continue the past growth rate for long, Number’s seem to suggest otherwise. ~6% market share in men’s innerwear & ~1.5% is just like scratching the surface of the opportunity.
So i agree with your earlier quote "I will consider moving out only when I see the sales growth starts tapering, which in my opinion is years away."
** "I away."I did hold page from 2009 and sold half of my holdings @3600 thinking that it’s costly and then paid the tuition fee to learn the above lesson 
**
if i throw a list of 15 stocks, i can easily give a reason (major risk) not to invest. but i cant find same thing with page, yet i continue to ignore it (not completely but not much allocation on the theory page can only give around 20% but others might give 30-35%)
hawkins, repco, astral, gruh, kaveri, accelya, pi ind, alembic pharma, unichem, ajanta, avanti, mayur, shilpa medicare, polymed, indusind
sometimes we try to chase an illusionary 30-35% growth ignoring certain 20%. may be its too simple business and hence gets ignored.