Moderation in consumer discretionary demand environment and increased competitive intensity, especially from Van Heusen innerwear are risks to the downside.
Brokerage firm Morgan Stanley has initiated coverage on Page Industries with an overweight rating and a price target of Rs 44,500.
The price target implies a potential upside of nearly 20 percent from current levels.
Morgan Stanley believes that the shares of Page Industries will rise relative to the index over the next 30 days.
Page, the largest innerwear brand (Jockey) in India, has built a strong and predictable business model on growth and profitability, according to Morgan Stanley. It sees the moderation in growth, that has triggered the recent de-rating, as a temporary blip.
The firm also said that the recent underperformance provides a good entry opportunity for long-term investors. Shares of Page Industries are down 12 percent so far this year.
Faster-than-expected pick-up in consumption (translating into higher topline growth) and thus better margin, strong revenue growth momentum in athleisure, the women’s segment and better-than-expected progress in smaller towns are some of the components that can help the stock move higher, according to Morgan Stanley.
Further moderation in consumer discretionary demand environment and increased competitive intensity, especially from Van Heusen innerwear are risks to the downside.
Morgan Stanley has assigned a 25 percent weightage to its bull case, 60 percent to base case and 15 percent to its bear case thesis for Page Industries. Bull case has received a higher weightage given the company’s track record of driving consistently strong revenue/earnings growth and strong cash generation.
Shares of Page Industries are trading 1.5 percent higher at Rs 36,841.
(Edited by : Hormaz Fatakia)
Source: cnbctv18.com
