Page Industries hosted a conference call on Nov 11,2021. In the conference call the company was represented by Mr V S Ganesh-Chief Executive Officer, Mr K Chandrasekar-Chief Financial Officer, MrGagan Sehgal-Chief Sales Officer and Mr Rahul Shukla- Chief Retail Officer.

Key takeaways of the call

The demand environment is as good as it can get and continuous increase in demand is creating a situation where supply is tight. The company is trying its best to increase the supply from the capacities and is reflected in Q2FY2022 numbers. Mobility and market functioning getting back to normal has resulted in an increase in out of home purchasing. This has reflected in the channels of modern trade and general trade where the company is seeing increase in business.

Revenues for the quarter stood at Rs 1084 cr, a growth of 116% QoQ and 46.6% YoY. Volumes grew by 122% QoQ and 43.6% YoY. End of September all the company's channels are functional.

Growth was broad based with healthy recovery witnessed across all segments including men's, women athleisure and kids (All categories grew around 40%).

E-commerce which was 2-3% of the company's business before pandemic has grown to 8-9% currently.

EBITDA margin stood at 21.5% in Q2 as against 22.3% in Q2FY2021. Gross margins stood at 39% which the company has historically reported in the range of 39-40%.

The company has taken price hikes in the range of 4-5% in Q1FY2022. The company was able to maintain the EBITDA margin above 20% in Q2FY2022 through its stringent cost control measures. The company is keeping a close watch on the raw material prices and will decide on future price hike based on the raw material price movement.

Other expenses grew 59% YoY on the back of higher marketing spends and increase in freight expenses due to growing volumes. Most of the operating expenses of the company are variable.

The company has crossed 100,000 + multi brand outlets in October and 1000+ exclusive brand outlets in September.

The company believes there is huge potential for expanding into rural and Tier III, IV towns. The company has expanded its multi brand outlet distribution reach by more than 60% during the pandemic (from 65000 outlets to 100000 outlets). More than 50% of the multi brand outlets have been added in the tier III and IV towns. The management indicated that strategically it was planning to go closer to the customer. Over the next four to five years the management believes that there is scope to double the multi brand outlets to 200000.

The company plans to add 150-200 exclusive brand outlets annually.

The company's manufacturing capacities are back to normalcy and the company is taking all the necessary steps for the safety of the associates. 98% of the associates have got at least 1 dose of vaccination and 75% of the associates have got both the doses.

Among product categories, all products have shown strong growth. Menswear has grown well while athleisure and women's wear have grown at a faster rate. Kids wear has been the focus area of the company and the company has opened 51 exclusive brand outlets ‘Jockey Junior'. The company has also appointed separate channel partners for the kids wear segment. The company also believes there is huge growth potential for women's inner wear and has aggressive expansion plans for the category. The company has created a separate identity of Jockey Women for the women's category and is planning to expand the women's product portfolio.

Production Capacity: The company has a production capacity of 250 million pieces and is operating at 80% capacity utilization. The company plans to increase the production capacity to 420 million pieces over next 3 years.

The company plans to accelerate the CAPEX in H2FY2022 to meet the enhanced demand. However, CAPEX was lower in H1FY2022 due to pandemic.

The company is incurring CAPEX of around Rs 300-400 cr YoY. The company plans to increase its capacity both in-house and through outsourcing. The company outsources 30-33% of its requirement. Increase in outsourcing is on account of robust demand.

Outlook: The company plans to be a billion-US dollar company by 2026 which means that that the company has to grow 2.75times over the last year. In the men's category, the company is growing at 17.-18% and in all other categories it is growing at single digits as such there is sufficient head room for growth.

Management Commentary: Commenting on the results, Managing Director, Mr. Sunder Genomal said, “As we announce our highest-ever revenue and PAT this quarter, we remain confident to deliver on the long-term growth prospects of the company. I am pleased to share that the sales momentum has picked up significantly after the setbacks of the global pandemic. We saw increased momentum in sales across all our product categories backed by expansion in our portfolio and existing network. We are well poised and remain optimistic on delivering sustainable growth in the foreseeable future. E-commerce continues to witness an increasing trend and our investments in warehousing, technology and logistics support helped not only in strong execution but also on delivering on profitable growth.

With a strong and proven business model, wide product portfolio, efficient financial management and a very loyal customer base, we remain committed to continue creating value for our stakeholders.”