Page Industries Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from Page Industries Ltd (PAGEIND) Q3 FY22 Earnings Concall

Management Update:

• PAGEIND commented it has been able to expand capacities in line with the increasing demand and have taken lot of measures to increase capacity, both in-house and with the chosen outsourced vendor partners.

• In the past five quarters, the company delivered the best four quarters in the history of PAGEIND, with the exception of 1Q that was impacted by partial lockdowns.

Q&A Highlights:

• Avi Mehta from Macquarie asked about the price increase, if the company has taken any further price hike than the 5% done in 2Q22 to pass on the input cost inflation. VS Ganesh CEO said the company increased the price by around 8% during Dec., Jan. This was mainly because of the input cost increase.

• Avi Mehta of Macquarie also asked that from the EBITDA margin point of view, should PAGEIND now aim for 22% margin going forward with the price increase.  VS Ganesh CEO replied that the company always curate the prices in such a way that it’s in the 20-21% range, so that PAGEIND can continue to be a value for money brand for consumers.

• Tejash Shah with Spark Capital enquired about EBO expansions, how much more runway the company is seeing in expansion in the next two years. Rahul Shukla CRO said that over the last two years, PAGEIND has been opening one store every two days in the year. The company added that it will continue to drive the pace of expansion moving forward.

• Tejash Shah with Spark Capital also enquired about the nature of expansion, if the company is getting to Tier 2, Tier 3 or it’s going deep in existing markets. Rahul Shukla CRO said that the company’s vision to have an [e-Bay] in every relevant, viable and sustainable catchment. PAGEIND added that its expansion is happening uniformly across metros, in Tier 1 and Tier 2 as well as in Tier 3 and Tier 4.

• Tejash Shah with Spark Capital asked about the least populous city the company would have got to so far.  Rahul Shukla CRO answered that typically the company defines the Tier 4 cities as the ones which have a population of 50,000 plus. So PAGEIND is targeting those markets.

• Ankit Kedia of PhillipCapital asked about MBO channel expansion and breakup of 1 lakh MBO outlets between men, women and kids. Gagan Sehgal President said that the percentage is pretty healthy. Out of the total men innerwear base, when it comes to women and athleisure, it’s almost 60% to 70% of that where women and athleisure is present.

• Sanjaya Satapathy from Ampersand asked about the top line outlook the company had given of touching some $1 billion sales by fiscal ’24 or something, and if it’s on track. VS Ganesh CEO replied the company is very much in the trajectory. And the QonQ performances are in line with the long-term business plan to achieve the target. PAGEIND believes it will hit it faster than thought.

• Gaurav Jogani with Axis Capital asked about the percentage contribution to the overall sales from the EBO outlets. Rahul Shukla CRO replied that it’s quite a substantial contribution, probably one-third of what PAGEIND does and it’s been growing rapidly over the last couple of years.

• Chirag Lodaya from Valuequest clarified about 24% volume growth during 3Q22 and top line growth was around 27%, 28% and the pricing element was just 3% YoY. K. Chandrasekar CFO replied that there is a lot of mix element in terms of channel and product category in that. It increased prices by close to 5% in Q1. So there is always an impact of premiumization and mix in that.

• Chirag Lodaya from Valuequest also asked about the advertising spend for 3Q22 and first nine months. K. Chandrasekar CFO replied that advertising spend was about INR294 million in 3Q22 and the nine-months spend was around INR715 million.

• Swagato Ghosh of Franklin Templeton asked if the company is thinking of any inorganic growth opportunities. VS Ganesh CEO replied that PAGEIND is not looking at any acquisition because there is a lot of work on hands in the organic growth itself. PAGEIND is growing rapidly and it needs to expand capacities and the future of the brand in India.