Page Industries- Case Study

2015-2016- Part 3

Let us assume that today the date is around 26th July 2016. Now we think of reevaluating Page as 4 years have gone since our holding.

This year the sales of the company grew by 16% while the growth rates in earnings is around 19%, resulting in  similar or slightly high margins. The growth of the company seems to be normalising.

Source: 2016 Annual Report

The Return on Capital employed of the business is almost similar as 2016. It further means that the growth of working capital and fixed assets is in similar proportion to sales (Around 30%).

Inventory Turnover, Debtors Turnover, Creditors Turnover and Fixed Asset Turnover Ratios too are similar.


The quality of the business is intact. In fact, the Marginal capital invested in the business has generated similar high returns of the past.


The majority of Free cash flow generated, was paid back to shareholders this year. This year company opened 82 new EBO’s resulting in total number to 265.

The effect of the same can be seen in the annual report, the company has almost similar deposits from dealers as are its Trade Payables.



This year majority of the cash flow was diverted towards repayment of borrowings, reducing D/E to 0.25 for 0.5. Overall the Debt levels are extremely low.

Share Price

1 Year View Source: tradingview

The price  has fallen around 10-15%, while the EPS of the company has grown by 19% resulting in a fall in PE from 87 to 67.

Page needs to be reevaluated, if the growth prospects + Quality is intact, then no decision is needed. Let us try to revalue the company today , thinking as we were taking a new position in the company today. 

Even if we take similar assumptions as we took in 2012, then the current share price justifies around 10% Volume growth, 5% Price growth and 4% terminal Free Cash flow growth. This results in Page producing around 37.9 crore pieces within next 10 years. Currently it is producing around half of that. (Interest rates have fallen to 6.75%)

Though by using these assumptions we are assuming a significant contraction of P/S multiple from 7 to 2, main question remains is whether Page will be able to grow at these rates?

Since we do not have much idea, we would not think of adding Page or Reducing it as there is no significant change in growth or quality of the business. Only change may be the scale is added so growth rates may not be similar as last two years. 


You may have thought differently or did something else. We would love to know why? Or you may use a different model for the entire case study – This way we can learn.

Though these falls in share prices look very easy in hindsight, one needs to develop ways to go through them. It would have been really tough in reality. Cases like these help us develop our mindset (Patterns) to face such situations later.

What Happened?

There were other time periods when Page could have been evaluated like from 2016-2018 and 2018-2020. If you plan to do it please share with us.

If we have inadvertently made some mistake please share with us. May you find cases like these helpful.

May we all learn together!

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