Result Update

February 10, 2017

Rating matrix
Rating : Sell
Page Industries (PAGIND) | 14440
Target : | 12000
Target Period
Potential Upside
:
:
12 months
-17%
Consistency in volume growth remains crucial
• Page registered healthy topline growth in Q3FY17 despite
What’s changed?
es
demonetisation blues. Revenues for the quarter grew 19.2% YoY to
Target Unchanged | 528.3 crore vs. our estimate of | 497.0 crore
EPS FY17E Changed from | 257.5 to | 252.8 • Volumes for the quarter grew 11.1% YoY to 35.6 million pieces
EPS FY18E Changed from | 322.2 to | 323.4 compared to 37.0 million pieces in Q2FY17 and 32.1 million pieces in
EPS FY19E Introduced at | 382 Q3FY16. Blended realisation grew 6.8% YoY to | 146/piece compared
Rating Unchanged to | 137 in Q2FY17 and Q3FY16
• Volumes for the men’s segment (major contributor – 54.8% of total
Quarterly performance
volume) recorded subdued growth of 2.0% YoY to 19.5 million pieces.
Q3FY17 Q3FY16 YoY (%) Q2FY17 QoQ (%)
Revenue 528.3 443.1 19.2 537.8 -1.8
However, realisations were up 8.5% YoY to | 122/piece. Overall
EBITDA 99.1 82.9 19.6 107.5 -7.8 revenue from men’s segment grew 10.7% YoY to | 238.6 crore.
EBITDA (%) 18.8 18.7 7 bps 20.0 -122 bps Strong revenue growth was witnessed in leisure segment, up 26.7%
PAT 62.9 52.0 20.9 68.5 -8.2 YoY to | 154.6 crore (volume up 16.4%; realisation up 8.9%). Volumes
from women and brassiere segment reported 12.9% YoY growth to
Key financials 5.6 and 1.8 million pieces, respectively, whereas revenue from
| Crore FY16 FY17E FY18E FY19E women’s segment grew 15.2% YoY to | 51.1 crore (realisation up 2%)
Net Sales 1,749 2,185 2,735 3,418 and revenues from brassiere segment grew 19% YoY to | 48.6 crore
EBITDA 377 449 561 657 (realisations up 5.4%). Socks revenue (5% of total revenues) grew
Net Profit 233 282 361 426 75.6% YoY to | 26.1 crore whereas Speedo revenues (0.4% of total
EPS (|) 175.7 208.5 252.8 323.4 revenues) grew 30.8% to | 2 crore
• On account of higher share of traded goods, gross margins declined
Valuation summary 340 bps YoY to 59.1%. In addition to the same, increased employee
FY16 FY17E FY18E FY19E expenses led to a decline in EBITDA margins, which were at 18.8% (I
P/E 69.3 57.2 44.7 37.8 direct estimate: 18.9%). Absolute EBITDA grew 19.6% YoY to | 99.1
Target P/E 57.5 47.5 37.1 31.4 crore (I-direct estimate: | 93.7 crore)
EV to EBITDA 42.9 35.9 28.7 24.6 • On account of healthy topline growth, PAT grew 20.9% YoY to | 62.9
Price to book 25.9 21.2 17.1 13.9 crore (I-direct estimate: | 57.9 crore)
RONW (%) 46.0 45.6 47.3 45.4 Leisure/sports segment gaining traction
ROCE (%) 61.0 59.5 63.1 61.9 Despite demonetisation woes, the leisure segment registered an
impressive revenue growth of 26.7% to | 154.6 core. This segment
Stock data
contributes 30% to total sales (up from 28% in Q3FY16) and 14% to total
Particular Amount
volumes. The company has various products under this category such as
Market Capitalisation (| Crore) 16,117.3
casual wear, sports wear and lounge wear. We expect momentum in
Debt (FY15) (| Crore) 73.4
leisure segment to continue as demand for active wear is on the rise.
Cash (FY15) (| Crore) 8.6
Demonetisation dampener; volumes to normalise to industry average…
EV (| Crore) 16,182.1
According to the management, total volumes impacted during the quarter
52 week H/L 17351 / 9770
Equity Capital (| Crore) 11.2
due to demonetisation were to the extent of 4%. Menswear, biggest
contributor to the overall product portfolio, continues to languish over the
Face Value (|) 10.0
past few quarters. The growth in the current quarter was lowest in the last
Price performance
three quarters at 2% YoY. However, this was completely compensated by
higher growth in leisure. The Indian innerwear market was at | 20000
1M 3M 6M 12M
(8.1% of Indian apparel market) and has grown at 11% in FY10-15. The
Rupa & Co 3.2 -8.2 -12.8 -3.1
current | 20000 crore Indian innerwear market is expected to grow at
Lovable Lingerie -2.3 -11.7 -7.6 -0.7
13% CAGR over the next decade to | 65000 crore.
Ashapura Inti. 1.9 -3.0 41.2 55.1
Page Industries 4.6 -9.7 3.0 21.8 Going gets tough; expensive valuation demanding higher growth rates…
The industry growth rate is pegged lower than company’s earlier stint of a
Research Analysts CAGR of 35% in FY10-16. Revenue growth in FY16 moderated to 16% in
Bharat Chhoda
FY16, which is expected to be a new run rate, unless the contribution
bharat.chhoda@icicisecurities.com from other SKUs shores up. We continue to believe in the higher quality
franchisee of Page, which would enable it to sustain margins. Despite our
Ankit Panchmatia
ankit.panchmatia@icicisecurities.com
current DCF based valuation, Page continues to trades at expensive
Cheragh Sidhwa valuation of 40x P/E and 7x MCap to sales. We consider these valuations
cheragh.sidhwa@icicisecurities.com pricey and recommend SELL. We maintain target price of | 12000.

ICICI Securities Ltd | Retail Equity Research

Variance analysis
Q3FY17 Q3FY17E Q3FY16 YoY (%) Q2FY17 QoQ (%) Comments
Revenue 521.2 489.8 439.3 18.6 532.1 -2.1 Volume growth was at 11.1%; realisation grew 6.8%
Other operating income 7.1 7.2 3.8 85.1 5.7 24.9
Employee Expense 95.6 84.5 84.6 13.0 95.8 -0.3
Raw Material Expense 213.1 230.6 165.0 29.2 215.6 -1.2 Higher traded goods resulted in increased RM expenses
SG&A Expenses 120.4 88.2 110.7 8.8 118.9 1.3

EBITDA 99.1 93.7 82.9 19.6 107.5 -7.8

EBITDA Margin (%) 18.8 18.9 18.7 7 bps 20.0 -122 bps
Depreciation 6.2 6.2 5.8 8.0 6.2 0.7
Interest 4.5 4.0 3.5 27.4 4.0 12.7

PBT 90.4 88.5 74.2 21.9 103.5 -12.7

Tax Outgo 27.5 30.6 22.1 24.3 35.0 -21.4
PAT 62.9 57.9 52.0 20.9 68.5 -8.2 Healthy topline growth resulted in 20.9% growth in PAT

Key Metrics
Menswear Volume (Mn pcs) 19.5 21.8 19.1 2.0 22.8 -14.4 Contributed 60% to total volume & 49% of total value sales in Q3FY16
Womenwear Volume (Mn pcs) 5.6 6.0 5.0 12.9 5.9 -4.6 Contributed 16% to total volume & 10% of total value sales in Q3FY16
Brasserie Volume (Mn pcs) 1.8 2.1 1.6 12.9 2.1 -16.9 Contributed 5% to total volume & 9% of total value sales in Q3FY16
Leisurewear Volume (Mn pcs) 5.1 5.0 4.3 16.4 4.7 8.8 Contributed 14% to total volume & 28% of total value sales in Q3FY16
Speedo Volume (Mn pcs) 0.0 0.1 0.0 32.8 0.1 -50.0
Average Realisation (|) 146.2 137.2 136.9 6.8 136.8 6.9

Source: Company, ICICIdirect.com Research

Change in estimates
FY15 FY16 FY17E FY18E FY19E
(| Crore) Old Old New % Change Old New % Change Introduced
Revenue 1,567.2 1,543.0 1,783.4 2,223.6 2,223.6 0.0 2,780.1 2,780.1 0.0 3,469.9
EBITDA 325.8 319.0 377.0 449.0 449.0 0.0 561.4 561.4 0.0 656.5
EBITDA margn (%) 20.8 21.1 21.6 20.6 20.6 0 bps 20.5 20.5 0 bps 19.2
PAT 204.5 196.0 232.6 287.2 282.0 -1.8 359.4 360.7 0.4 426.1
EPS (|) 183.4 175.7 208.5 257.5 252.8 -1.8 322.2 323.4 0.4 382.0
Source: Company, ICICIdirect.com Research

Assumptions
Current Earlier FY19E
FY13 FY14 FY15 FY16 FY17E FY18E FY17E FY18E Introduced
Volume (In Lakh Pieces)
Men's 557.1 612.2 731.4 773.5 905.0 1,040.7 905.0 734.6 1,196.9
Women's 140.1 160.7 182.9 208.1 245.6 289.8 245.6 184.3 333.2
Brassieres 28.3 40.7 52.3 67.2 84.0 105.0 84.0 55.0 131.3
Leisure 142.7 195.1 236.2 269.3 317.8 375.0 317.8 256.3 442.5
Speedo 3.7 3.9 4.1 4.7 5.9 7.3 5.9 4.8 9.2
Blended realisation (| per piece) 98.9 115.1 125.4 132.1 140.2 150.5 140.2 126.9 161.8
Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 2

 Company Analysis
Traditional channels remain major contributor to revenues
With a strong brand name, it has also built a strong distribution network
through which it distributes its products. With a combination of exclusive
brand outlets (EBO), large format stores (LFS), multi brand outlets (MBO)
and traditional hosiery/multipurpose store, the company has adopted an
omni channel distribution strategy. Page has more than doubled its EBOs
from 140 in FY14 to 320 stores as on December 31, 2016. It has 150
international outlets in Sri Lanka and UAE. However, traditional channels
continue to remain the largest distribution channel.

Exhibit 1: Distribution channel break-up

Large format stores

6%
EBO
9%
MBO
40%

Hosiery
45%

Source: Company, ICICIdirect.com Research

Product innovation at core from house of “Jockey”…

With the continued support from Jockey International, US, and access to
ideas, trends and innovations from 40 other Jockey international
licensees globally, Page continues to innovate and provide the innerwear
market with newness and innovation. With core values revolving around
youthfulness, fun, quality, value, confidence and innovation, the company
introduces newer SKUs targeted towards men and women.
Exhibit 2: New products from house of “Jockey”

Source: Company presentation, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 3

 Topline growth trajectory Revenue reports healthy growth despite demonetisation blues

600 568 532 521 Page’s revenues have grown at 35% CAGR in FY10-15. However, for
500 445 462 439 424 FY16, the growth rate dropped to 15.6% YoY. As new EBOs stabilise,
377 372
400 growth rates would take some time to scale up following which we expect
| crore

300 revenues to grow at 25% CAGR in FY16-19E owing to a larger base effect.
200 We believe majority of the growth would be driven by volumes as the
100
competitive scenario would lead to marginal growth in realisation.
-
Considering the penetration of branded innerwear is significantly low in
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17 India and Indians spend significantly lower on innerwear compared to
their Asian peers, we do not anticipate any roadblocks in the company’s
Source: Company, ICICIdirect.com, Research growth plans. Continuous capacity addition and entry into newer markets
would remain key trigger for upgrade.
Exhibit 3: Volume dominated by men’s segment… Exhibit 4: Realisation growth to get difficult…

100 350
90 300
33 26 29 30 24 26 28 25 25
80 33 31 27 30
70 250 250
7 8 8 9 10 10 9 10 10 235
60 8
10 9 7 9 9
200 212
10 9 11 9 10 11 10 191 192 191 196

| per piece
11 10 10 10 182
%

50 177
168
40 150 145 151
30 118 127
48 51 53 47 50 49 49 49 46 48 50 46 100 105 110
20 45
80 83 95
10 62 70
50 81 84
0 72 80 77
- 49 58
Q3FY14

Q4FY14

Q1FY15

Q2FY15

Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Q3FY17

FY10 FY11 FY12 FY13 FY14 FY15 FY16

Men Bra Women Sports

Men Women Bra Leisure Speedo

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

Exhibit 5: Men’s segment witnesses volume growth of 10% YoY… Exhibit 6: …while women’s segment grows at 20% YoY
23.7 22.8
25 120 8 6.9 90
19.8 20.7 19.1 19.5 7
17.7 17.5 17.3 100 5.9 5.9 5.6
20 6 80
4.9 5.0 4.9
80 5 4.3 4.4
15
60 4 70
10 3
40
5 2 60
20 1
- - - 50
Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Q3FY17

Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Q3FY17

Volumes (in Mn pcs) Realisation (|) (RHS) Volumes (in Mn pcs) Realisation (|) (RHS)

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

Exhibit 7: Brassiere segment grows at 22% YoY, albeit on small base… Exhibit 8: …and leisure wear (excl. socks) segment grows at 4% YoY

2.5 2.1 2.1 280

270 6 5.0 5.1 320
2.0 1.8 1.8 1.8 260 4.5 4.5 4.7
1.6 5 4.2 4.3
1.5 250 4.0 3.8 270
1.5 1.2 1.3 240 4
230 3 220
1.0 220
210 2
0.5 200 170
1
190
- 180 - 120
Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Q3FY17
Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q1FY17

Q2FY17

Q3FY17

Volumes (in Mn pcs) Realisation (|) (RHS) Volumes (in Mn pcs) Realisation (|) (RHS)

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research; (impact of exclusion of socks in Q1FY16)

ICICI Securities Ltd | Retail Equity Research Page 4

 Capacity addition to continue
Page has continuously expanded capacity in line with the growing
demand for its products. The company’s capacity has increased from 2.2
crore pieces in FY07 to 22.5 crore pieces in FY16. We expect the same to
go up to 40 crore pieces by FY19E. As the company is absent in a highly
capital intensive segment, Page has comfortably been able to fund the
same through internal accruals. We expect the same to continue, going
forward. With the current rate of capacity addition, the company is only
able to cater to Indian markets despite holding licenses for Sri Lanka,
Bangladesh, Nepal and UAE as well. In a scenario when Indian demand
starts to flatten out, the company can access these markets for growth
opportunities.
Exhibit 9: Continuous capacity addition aids healthy topline growth

40.0 37.0
35.0 31.3
30.0 26.6
25.0 22.5
Pcs in crore

19.4
20.0 16.3
13.6
15.0 10.9
10.0 8.3
4.5 5.1
5.0 2.2 3.1

-
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

Source: Company, ICICIdirect.com Research

Expect margins to remain in range of 18-21%

The management aims to maintain the operating margin around 18-21%.
The company does not take aggressive price hikes despite the strong
demand and believes in taking price hikes that are necessary to maintain
its operating margins. Though the operating margin touched 21.1% (in
FY15) owing to the benefits of removal of excise duty, we expect margins
to remain pressurised with a negative bias over the next three years.

Exhibit 10: EBITDA margin trend

23.0 22.4 21.7

25 21.4 21.0 21.6
20.3 20.2 21.1 20.6 20.5
18.8 18.7 19.1 20.0 18.8 19.2
20

15
%

10

0
FY14

Q1FY15

Q2FY15

Q3FY15

Q4FY15

FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

FY16

Q1FY17

Q2FY17

Q3FY17

FY17E

FY18E

FY19E

EBITDA Margin

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 5

 PAT to grow at CAGR of 22% in FY16-19E
Owing to a healthy topline growth and fairly stable margins, the company
has been able to grow PAT consistently. We expect the same to continue,
going forward. PAT has increased at a CAGR of 38% in FY10-16. However
given the subdued FY16, growth rate is expected at a CAGR of 22% in
FY16-19E.

Exhibit 11: Net profit trend

450.0 426.1
400.0 360.7
350.0
282.0
300.0
232.6
| crore 250.0
196.0
200.0 153.8
150.0
100.0 54 63 60 57 68 68 63
50 45 47 52
50.0
-
FY14

Q1FY15

Q2FY15

Q3FY15

Q4FY15

FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

FY16

Q1FY17

Q2FY17

Q3FY17

FY17E

FY18E

FY19E
Source: Company, ICICIdirect.com Research

Dividend payouts to be maintained

Over the years, Page has maintained a dividend payout in excess of 40%.
Despite the continuous capacity addition, the company has been able to
maintain this owing to the strong cash generated in the business. We
expect this to be maintained at current levels.

Exhibit 12: Product portfolio well diversified

Source: Company presentation, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 6

 Valuation
We believe changing demographics will continue to work in favour of
consumption oriented companies like Page Industries. The company will
be a beneficiary of the shift from unbranded to branded products. Apart
from local demand, Page has licenses to cater to countries like Nepal, Sri
Lanka, Bangladesh and UAE. Currently, Page’s exports are negligible. The
company will be able to explore export opportunities as and when
domestic demand begins to dry up.
The stock has also faced some concerns that the company will need to
resort to debt to be able to maintain its current dividend payout and
capex requirements. The company incurs a capex of | 30-40 crore each
year and pays out | 50-60 crore in the form of dividends. With cash from
operations of ~| 100 crore, the company should be able to maintain the
payout as well as the capacity addition without needing to raise
substantial debt. Most debt that the company raises is typically towards
working capital requirements.
Given the unorganised nature of the Indian hosiery market, Page
Industries with its strong brand recall of “Jockey” is expected to lead the
market shift towards organised and premium innerwear segment. We
anticipate growth will be multi-pronged (growth in brassier and leisure
segment together with women’s wear besides the men’s innerwear
segment) and long drawn as the industry moves towards more organised
segment. To capture this growth, we shift towards three phase
discounted cash flow based valuation. We reduce Page’s estimates to an
average growth rate of ~23% CAGR in FY15-20E buoyed by volume
growth of ~16% in the same period. We estimate the women’s segment
will grow at an average CAGR of 21% over the same period followed by
men’s innerwear segment registering growth of 21%. In subsequent
phases of transition and stable growth (FY21-25 & FY26-30, respectively)
we expect revenue to grow at a CAGR of ~21% and 15%, respectively,
supported by volume growth of 14% and 10%, respectively. We expect
average realisation in the period to grow at 6%, 6% and 4%, respectively.
Consequently, based on our DCF valuation, we arrive at a target price of
| 12000. We continue to have a SELL recommendation on the stock.

Exhibit 13: DCF valuation

DCF Valuation
Terminal growth (%) 3
PV of high growth period (| )Cr 1083.2
PV of transitional growth period (| Cr) 2289.4
PV of stable growth period (| Cr) 6085.4
PV of terminal growth (| Cr) 3926.9
Total (| Cr) 13384.9
Source: Company, ICICIdirect.com Research

Exhibit 14: Valuations

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY15 1514.0 29.1 175.7 27.5 82.2 50.9 50.7 57.8
FY16 1749.5 15.6 208.5 18.7 69.3 42.9 46.0 61.0
FY17E 2184.6 24.9 252.8 21.2 57.2 35.9 45.6 59.5
FY18E 2735.2 25.2 323.4 27.9 44.7 28.7 47.3 63.1
FY19E 3418.2 25.0 382.0 18.1 37.8 24.6 45.4 61.9
Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 7

Recommendation history vs. Consensus
20,000 100.0
18,000 90.0
16,000 80.0
14,000 70.0
12,000 60.0
(|)

(%)
10,000 50.0
8,000 40.0
6,000 30.0
4,000 20.0
2,000 10.0
0 0.0
Jan-15 Mar-15 Jun-15 Aug-15 Nov-15 Jan-16 Mar-16 Jun-16 Aug-16 Nov-16 Jan-17
Price Idirect target Consensus Target Mean % Consensus with SELL

Source: Bloomberg, Company, ICICIdirect.com Research

Key events
Date Event
Mar-08 Continues capacity expansion from 2.2 crore pieces in FY07 to 3.1 crore pieces in FY08; witnessed topline growth of 42% and PAT growth of 40% YoY
Mar-09 Further expands capacity from 3.1 crore pieces (FY08) to 4.5 crore pieces translating to topline growth of 32% and PAT growth of 33% YoY
Jul-10 Capacity increases 60% YoY from 5.1 crore pieces (FY10) to 8.3 crore pieces (FY11), leading to 45% & 48% topline and PAT growth, respectively
Aug-11 Continues topline and bottomline growth at 30%+ and also increases dividend payout from ~30% in FY07 to ~50%
Mar-13 Revenue growth relatively slows down to 26.3% in FY13, mainly due to lower price hikes taken during the year
Jul-13 Reports strong ~40% topline and 32% bottomline growth in Q1FY14
Mar-15 Reports 29% topline and 28% bottomline growth in FY15
Aug-15 Reports slowest growth since FY10. Topline grew by 16% (run rate ~25%) and PAT grew by 16% (run rate ~30%) in Q1FY16
Nov-15 Reports 16% YoY growth; PAT grew 21% YoY to | 60.3 crore. Tapered our estimates and lowered TP to | 12700
Feb-16 Reports 15% YoY growth in revenues; PAT was at | 52 crore
May-16 Reports 15% YoY growth; men's volumes de-grew by 1%. EBITDA margins at 18.9% and PAT at | 57 crore
Aug-16 Reports 28% YoY growth; men's volumes grew by 20%. EBITDA margins at 18.5% and PAT at | 73 crore
Nov-16 Reports 15% YoY growth; men's volumes grew by 10% ;Brasserie and women wear grew by ~20% each. Margins subdued at 19%.

Source: Company, ICICIdirect.com Research

Top 10 Shareholders Shareholding Pattern

Rank Investor Name Last Filing Date %O/S Position (m) Change (m) (in %) Dec-15 Mar-16 Jun-16 Sep-16 Dec-16
1 Genomal (Nari) 31-Dec-16 16.3% 1.8 0.0 Promoter 51.0 49.0 49.0 49.0 49.0
2 Genomal (Ramesh) 31-Dec-16 16.3% 1.8 0.0 FII 34.3 37.2 37.4 37.2 37.8
3 Genomal (Sunder) 31-Dec-16 16.3% 1.8 0.0 DII 5.4 4.8 4.7 4.6 4.8
4 Nalanda Capital Pte Ltd 31-Dec-16 10.0% 1.1 0.0 Others 9.3 9.0 8.9 9.2 8.4
5 Cartica Capital, Ltd. 31-Dec-16 7.7% 0.9 0.0
6 IIFL Inc 31-Dec-16 5.9% 0.7 0.0
7 ABG Capital, Ltd. 31-Dec-16 2.4% 0.3 0.0
8 Capital Research Global Investors 31-Dec-16 1.5% 0.2 0.0
9 SBI Funds Management Pvt. Ltd. 31-Dec-16 1.3% 0.1 0.0
10 Matthews International Capital Management, L.L.C. 30-Sep-16 1.3% 0.1 0.0

Source: Reuters, ICICIdirect.com Research

Recent Activity
Buys Sells
Investor Name Value Shares Investor Name Value Shares
Waddell & Reed Investment Management Company 6.8 0.0 ICICI Prudential Asset Management Co. Ltd. -1.3 0.0
Axis Asset Management Company Limited 2.1 0.0 IIFL Inc -1.1 0.0
BlackRock Institutional Trust Company, N.A. 0.5 0.0 ABG Capital, Ltd. -0.8 0.0
The Vanguard Group, Inc. 0.1 0.0 Cartica Capital, Ltd. -0.4 0.0
Columbia Threadneedle Investments (US) 0.0 0.0 Birla Sun Life Asset Management Company Ltd. -0.3 0.0

Source: Reuters, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 8

Financial summary
Profit and loss statement | Crore Cash flow statement | Crore
(Year-end March) FY16 FY17E FY18E FY19E (Year-end March) FY16 FY17E FY18E FY19E
Total operating Income 1,783.4 2,223.6 2,780.1 3,469.9 Profit before Tax 344.2 423.5 541.7 639.8
Growth (%) 15.6 24.9 25.2 25.0 Add: Depreciation 23.8 26.2 24.3 27.9
Raw Material Expenses 813.3 1,072.5 1,362.1 1,729.0 (Inc)/dec in Current Assets (117.8) (70.6) (99.3) (222.5)
Employee Expenses 313.0 403.3 507.9 640.0 Inc/(dec) in CL and Provisions 46.3 31.4 (1.2) 68.3
Other Expenses 280.1 298.8 348.7 444.4 Taxes Paid (111.6) (141.5) (181.0) (213.8)
Total Operating Expenditure 1,406.4 1,774.6 2,218.7 2,813.4 Others 28.3 27.0 18.1 14.0
EBITDA 377.0 449.0 561.4 656.5 CF from operating activities 213.1 296.0 302.7 313.7
Growth (%) 18.2 19.1 25.0 16.9 (Inc)/dec in Investments 0.4 0.8 2.4 4.6
Depreciation 23.8 26.2 24.3 27.9 (Inc)/dec in Fixed Assets (18.9) (60.2) (68.7) (76.6)
EBIT 353.2 422.8 537.1 628.6 Others - - - -
Growth (%) 17.2 19.7 27.0 17.0 CF from investing activities (18.5) (59.4) (66.3) (72.0)
Interest 15.3 11.6 10.7 7.6 Issue/(Buy back) of Equity - - - -
Other Income 6.2 12.2 15.3 18.8 Inc/(dec) in loan funds (61.0) 19.2 (3.8) (12.9)
PBT 344.2 423.5 541.7 639.8 Dividend paid & dividend tax (114.2) (169.2) (216.4) (249.2)
Growth (%) 17.4 23.0 27.9 18.1 Others (15.3) (11.1) (10.7) (7.6)
Total Tax 111.6 141.5 181.0 213.8 CF from financing activities (190.4) (161.1) (230.9) (269.8)
PAT 232.6 282.0 360.7 426.1 Net Cash flow 4.2 75.5 5.4 (28.0)
Growth (%) 18.7 21.2 27.9 18.1 Opening Cash 4.4 8.6 84.1 89.5
EPS (|) 208.5 252.8 323.4 382.0 Closing Cash 8.6 84.1 89.5 61.5
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

Balance sheet
es
| Crore Key ratios
es

(Year-end March) FY16 FY17E FY18E FY19E (Year-end March) FY16 FY17E FY18E FY19E
Liabilities Per share data (|)
Equity Capital 11.2 11.2 11.2 11.2 EPS 208.5 252.8 323.4 382.0
Reserve and Surplus 494.1 606.8 751.1 927.9 Cash EPS 229.9 276.3 345.2 407.0
Total Shareholders funds 505.2 618.0 762.3 939.1 BV 453.0 554.0 683.4 841.9
Total Debt 73.4 92.6 88.8 75.9 DPS 85.0 126.4 161.7 191.0
Deferred Tax Liability 11.0 14.4 18.8 23.9 Cash Per Share 7.8 75.4 80.3 55.1
Other long term liabilities 73.5 78.6 84.1 90.0 Operating Ratios
Total Liabilities 663.2 803.6 953.9 1,128.8 EBITDA Margin (%) 21.6 20.6 20.5 19.2
Assets PBT Margin (%) 19.7 19.4 19.8 18.7
Gross Block 315.6 368.0 435.3 510.1 PAT Margin (%) 13.3 12.9 13.2 12.5
Less: Acc Depreciation 106.3 131.0 155.3 183.2 Inventory days 85.0 95.0 86.0 86.5
Net Block 209.3 237.1 280.0 326.9 Debtor days 18.0 20.0 16.0 15.8
Capital WIP 0.4 8.1 9.6 11.3 Creditor days 45.0 39.0 39.0 39.0
Intangible Assets 3.6 3.6 3.6 3.6 Return Ratios (%)
Total Fixed Assets 213.2 248.7 293.1 341.8 RoE 46.0 45.6 47.3 45.4
Investments - - - - RoCE 61.0 59.5 63.1 61.9
Inventory 539.3 568.6 644.5 810.1 RoIC 62.0 68.4 71.4 66.7
Debtors 103.4 119.7 119.9 147.5 Valuation Ratios (x)
Loans and Advances 70.5 87.5 109.2 136.8 P/E 69.3 57.2 44.7 37.8
Cash 8.6 84.1 89.5 61.5 EV / EBITDA 42.9 35.9 28.7 24.6
Total Current Assets 731.2 859.9 963.1 1,155.8 EV / Net Sales 9.2 7.4 5.9 4.7
Sundry Creditors 94.1 114.6 145.5 184.7 Market Cap / Sales 9.2 7.4 5.9 4.7
Current Liabilities 123.4 88.4 104.9 124.2 Price to Book Value 25.9 21.2 17.1 13.9
Provisions 64.0 110.0 61.3 71.2 Solvency Ratios
Total Current Liabilities 281.5 313.0 311.8 380.1 Debt/EBITDA 0.2 0.2 0.2 0.1
Net Current Assets 449.6 546.9 651.3 775.8 Debt / Equity 0.1 0.1 0.1 0.1
Other Non-current Assets - 8.0 9.5 11.3 Current Ratio 2.6 2.7 3.1 3.0
Application of Funds 663.1 803.6 953.9 1,128.8 Quick Ratio 0.6 0.9 1.0 0.9
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 9

ICICIdirect.com coverage universe (Apparel)
CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%)
Sector / Company (|) TP(|) Rating (| Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
Kewal Kiran Clothing (KEWKIR) 1760 1844 Hold 2386 55.0 66.8 78.9 32.0 26.3 22.3 23.7 22.5 19.5 33.5 30.7 40.7 20.7 22.5 25.0
Page Industries (PAGIND) 14450 12000 Sell 16117 208.5 252.8 323.4 69.3 57.2 44.7 42.9 35.9 28.7 61.0 59.5 63.1 46.0 45.6 47.3
Rupa & Company (RUPACO) 267 - Unrated 2210 8.3 10.4 12.2 32.2 25.7 21.9 18.1 14.7 12.9 18.3 17.1 17.8 17.9 18.8 19.1
Vardhman Textiles (VARTEX) 1308 1190 Buy 8308 92.6 146.0 125.9 14.1 9.0 10.4 6.6 5.8 4.8 16.1 17.1 20.3 15.0 20.7 15.4
Arvind Ltd (ARVLIM) 385 480 Buy 8078 14.1 16.7 22.1 27.4 23.0 17.4 12.8 10.8 9.4 13.8 15.4 16.4 12.5 12.8 14.8
Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research Page 10

RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns
ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research Page 11

ANALYST CERTIFICATION
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ICICI Securities Ltd | Retail Equity Research Page 12