THE CENTURION: PAGE INDUSTRIES BECOMES A 100 BAGGER

THE CENTURION: PAGE INDUSTRIES BECOMES A 100 BAGGER

JOCKEY’S 100X JOURNEY

PAGE IND IPO IN 2007

Issue Price: 360

CMP:   36000

The adage for horse racing, “Don’t bet the horse, bet the jockey!” couldn’t be more literally applied to this wealth creator on Dalal-Street. As the stock price of Page Ind hit `36000 mark on the bourses on Aug 28, 2018 it was a moment of reckoning as it marked the stock’s 100X journey or 9900% returns to shareholders from the IPO Issue price at `360/share.

JOCKEY’S 100X JOURNEY

Issue Price X Minimum Lot: 360 X 15 = Rs. 5400

Today Those 15 Shares = Rs. 540000

Jockey in 2007 = Saville Row Suit in 2018

While recent followers of the stock wouldn’t be surprised with these galloping moves on the stock, it’s interesting to know that the company’s IPO in Feb 2007 saw a tepid response. Applicants offered to buy the stock at the lower end of range `360-395/Sh. If that surprises you in hindsight, fathom this, Page Industries Listed on March 16, 2007 at 341.9 (5% below issue price of 360) and witnessed continuous selling to close at 282.1 that day. It took Page Industries one whole month to get past the Issue Price of 360.

JOCKEY’S 100X JOURNEY

Stock                     +100X

Revenue                 +17X

EBITDA                 +20X

Net Profit               +21X

#Since-2007

JOCKEY’S 100X JOURNEY

Revenue

FY07                 148 Cr

FY18                 2551Cr

11 Yr CAGR      30%

EBITDA

FY07                 27 Cr

FY18                 541 Cr

11 Yr CAGR      31%

Net Profit

FY07                 17 Cr

FY18                 347Cr

10 Yr CAGR      32%

However, moving beyond the stock price gains the story and growth of Page Industries has been a remarkable one. Established in 1995, Page Ind gets its name from first two letters of the name & surname of Parpati Genomal; the founders' mother. Page Industries Limited is exclusive Licensee of Jockey International Inc. (USA) for India, Sri-Lanka, Nepal, Bangladesh and Maldives. The founders, Genomal group have been associated with Jockey International Inc for over 50 Years. They have been their sole licensee in Philippines for over a decade before entering other geographies. Recently, Jockey renewed its license with Page Industries for India until 2040.

Since listing, the company’s revenue has multiplied by a factor of 17 & their profitability has increased by 21 times. This, without compromising on financial discipline, Page Industries’ Return on Equity has been maintained over 50% for the last 10 yrs and the management sees no reason for it to go below that.

Strengths

Brand’s Market leadership

Jockey Renewed License for India till 2040

Strong Distribution

Opportunity to gain share after GST

                               10Yr Avg RoE = 50%                          

Co Tapping Into

 Women’s Wear

Leisure Wear

 Expanding Speedo’s Biz

Mgmnt Guidance

Revenue Growth of 20% over next 20 years

Margins Seen B/w 21-22%

ROE to Remain Above 50%

While many argue that Page Industries is expensive at 68X FY20e Earnings, many would say that the company’s brand strength, distribution leadership, historic financial growth, and strong future growth plans justify these valuations. What happens to the stock price is anyone’s guess, but as far as Page Industries business mantra is concerned, I’ll quote Mr. Ashok Genomal, who said to me in an interview not too long ago “Our biggest competition is ourselves”

THE VALUATION PICTURE: PAGE INDUSTRIES

Trades at 68X FY20e