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- 10 Nov 2022
- ICICIdirect Research
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PAGE REPORTED SUBDUED OPERATIONAL PERFORMANCE
PAGEIND - 48003 Change: 2,938.80 (6.52 %)News:
Revenue for the quarter grew 16% YoY to Rs 1255.0 crore (I-direct estimate: Rs 1252.7 crore, three-year CAGR: 17%). The growth was mainly realisation led which increased by 15% YoY to Rs 220/piece. Volume grew merely by 1% YoY to 57.2 million pieces as previous quarter had healthy volumes of mask. Excluding the same, volumes in core category grew by 7% YoY. Company continued to enhance its distribution touchpoints, wherein it added 4408 taking the total count to 118123 touchpoints (~2x vs. pre-covid levels)
· Despite pressure on raw materials (cotton yarn), calibrated price hikes and better inventory management led to gross margins expanding by 100 bps YoY at 55.8% (I-direct estimate: 54.7%). However, benefits of higher gross profits were negated as company accelerated spends towards marketing expenses and manpower cost. Employee and other expenses grew by 30% and 26% YoY, respectively. Subsequently, EBITDA margins declined by 258 bps YoY to 19.0% (I-direct estimate: 21%). Absolute EBITDA grew by 2% YoY to Rs 237.9 crore (I-direct estimate: Rs 266.8 crore)
· Ensuing PAT grew by 1% YoY to Rs 162.1 crore (I-direct estimate: Rs 182.0 crore)
View:
The management indicated that core revenue (excluding masks) grew by 20% YoY in Q2FY23. The growth was broad based across all segments. Athleisure and women segment continues to grow at a faster pace as compared to men’s category. On a three-year CAGR basis, volume grew by 7%. Management continues to monitor the ongoing inflation concerns and expects to maintain EBITDA margin of around 21-22% as raw material prices have softened in the recent times. The company’s products are witnessing healthy demand and the management expects the trend to continue.
Impact:
Neutral