The stock of Bengaluru based Page Industries, owner of the brand Jockey, is trading lower by over 7% on the NSE despite its strong set of quarterly results. Here is discussed the reason for the scrip’s sharp fall:
The scrip during the opening bell traded lower by as much as 7% and still continues to trade lower around the same level. At the time of writing the story, the stock of Page Industries on the NSE quoted lower by 7.94% at Rs. 22,084.
Page Industries’ net profit for the quarter ended December FY19 came in higher by 22.2% at Rs. 101.9 crore in comparison to the same quarter last year of Rs. 83.4 crore, indicating a rebound in the company’s performance. The company’s operating revenue also surged 18.9% from Rs. 621 crore in Q3FY18 to Rs. 738.3 crore in the last ended December quarter.
In the quarter ended September, the company reported disappointing earnings report, which dragged the stock down by 40% from its record high price.
The current movement in the stock is triggered due to profit-booking in the stock which was also imminent in Thursday’s session despite healthy earning numbers. Another reason for the stock’s current downward trajectory is ‘neutral’ stance on the stock by brokerage firm Motilal Oswal that has put forth price target of Rs. 25,755 per share.
As per the brokerage house, volume growth due to festive mismatch has worked in the favour of Jockey manufacturer in the third quarter ended December of FY19 and the stock is a good investment bet, given better earnings growth and healthy RoCEs in comparison to its peers. “However, valuations at 50.8x FY20E EPS leave little room for upside from a one-year perspective”, added Motilal Oswal.
Page industries’ amongst its peers commands the most expensive valuation with P/E of 67.77, while other listed brands such as Rupa, Lux and Dollar Industries fall in the P/E range of 20-30.
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