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Eicher Motors vs. Page Industries: Which One is Investors’ Favorite?

eicher-motors-vs-page-industries-investors-favoriteThese two stocks have been the market favorites for the last few years, and have generated returns far in excess of the market. We decided to analyze why Eicher Motors may have outperformed Page Industries, when many similarities exist between the two companies.

We are not commenting on the future financial performance or target price of the two companies.


Eicher Motors Ltd. and Page Industries Ltd. operate in totally diverse industries. Eicher Motors Ltd. operates in the automobile sector and is a leading manufacturer of commercial vehicles (trucks and buses), motorcycles and personal utility vehicles. Page Industries Ltd. is an apparel manufacturer and the India master franchisee of Jockey International of the U.S.

In other words, while Eicher Motors Ltd. is primarily into B2B, Page Industries Ltd. is only into B2C.

We review how the businesses of the two have evolved over the last few years.

Eicher Motors Ltd.: Royal Enfield – the Game Changer

We note that the share of Royal Enfield motorcycles in the company’s sales grew aggressively over the last 5 years. The motorcycle business has proven to be the game-changer for the company’s financial performance and valuations. Manufacturing capacity has been raised 9x since 2010.

Royal Enfield Sales Data 2011 2012 2013 2014 2015
Gross Sales (incl. excise) RsCr 662.85 1,073.65 1,763.06 3,074.41 N.A.
Sales Volume 74,626 113,432 178,121 302,592 452,759
Volume Growth y-o-y 41.9% 52.0% 57.0% 69.9% 49.6%
Average Sales Realisation Rs 88,823 94,651 98,981 101,602 N.A.
% of Company Sales 10.8% 15.3% 23.7% 32.9% N.A.
Company Gross Sales RsCr 6,130.29 6,995.04 7,433.29 9,351.74 N.A.

Royal Enfield sales volumes grew 7.6x, at 53.8% CAGR, during FY10-15. Royal Enfield enjoyed industry best EBIT margin of 25.2% in CY15. The manufacturing capacity is to be ramped up from 0.6mn units p.a., to 0.62mn p.a. during 2016, and further to 0.9mn by 2018. 1 new product is to be launched by end-2017.

We expect the share of Royal Enfield motorcycles to move up, within the company’s consolidated sales, going ahead.

Page Industries: Riding the Consumerism Boom, on the back of Rising Share of Organized Sector

Page Industries has also been ramping capacities up over the last few years, and its Jockey brand has become a force to reckon with, in the innerwear market. It is riding on the consumption boom and fast growing market for ladies’ innerwear in India. The rising share of unorganized sector in the innerwear market is a key positive for Page Industries, which is already a leading player in the segment.

What Do These Two Diverse Companies Have in Common?

We note that there are a few similarities between the two companies, such as:

  • Strong brands, backed by wide distribution network
  • Strong management teams
  • Track record of aggressive revenue growth
  • Consistently growing post-tax profit
  • Strong RoE
  • High dividend payout
  • Strong balance sheets, with near-zero leverage
  • No bonus issues or stock splits

We carried out a Comparison between the two and tabulated the same along a few criteria as contained later in this article.

Conclusion: Royal Enfield has been the Game Changer for Eicher Motors Ltd.

Based on our analysis as contained in this article, we conclude that investors seem to have clearly favored Eicher Motors Ltd. over Page Industries Ltd, in terms of stock price returns.

The one single reason we can think of which led to outperformance of Eicher Motors, is the 7.6x sales volume growth in Royal Enfield motorcycles since 2010, particularly after the launch of the Royal Enfield ‘Classic’.

In contrast, the innerwear segment in which Page Industries operates, remains competitive, with most leading global players already present in the Indian innerwear market.

Eicher Motors’s outperformance vis-à-vis Page Industries is significant in the backdrop of higher liquidity (trading volumes) enjoyed by the former, that too, in spite of slightly lower free-float and institutional ownership, than the latter. However, a much larger number of FIIs and MFs have invested in Eicher Motors than in Page Industries. Retail ownership is also higher in case of Eicher Motors Ltd.

The Road Ahead: Businesses Remain Robust; Investors Could Benefit from a Stock Split

Eicher Motors will likely continue to ride on the success of Royal Enfield motorcycles, by raising the manufacturing capacities. While the motorcycle market in India shrunk in 2015, the share of the premium segment, in which Royal Enfield has a strong presence, is in fact growing. This bodes well for the company.

Page Industries too will continue to grow by increasing manufacturing capacities. It entered the niche swimwear segment by tying up with the Speedo brand a few years ago.

As stated above, neither company has made any issue of bonus shares or split the stock. Both stocks have become “high-priced” stocks since the last 4-5 years, materially hampering liquidity. We believe investors could benefit, if the companies were to split the stock into face value of Rs5 or Rs2 per share.

Revenue and Profit Track Record

(Figures in RsCr unless stated otherwise) Eicher Motors Page Industries
Sales CY15 / FY15 11,924 1,543
Sales FY16 YTD   1,348
5-year Sales CAGR 22.1% 35.4%
EBITDA CY15 / FY15 1,807 319
5-year EBITDA CAGR 38.1% 37.9%
PAT CY15 / FY15 943 196
PAT FY16 YTD   175
5-year PAT CAGR 37.9% 37.7%
3-year Average EBITDA margin 12.8% 20.8%
Effective Average Tax Rate (last 3 years) 27.1% 33.1%
RoE CY15 / FY15 27.3% 42.9%
Dividend Payout ratio CY14 / FY15 26.4% 48.9%

Note: Eicher Motors has been in existence much before Page Industries. While Eicher Motors was incorporated in 1959, Page Industries was incorporated in 1994. Besides, the nature of the business partly explains the higher revenue size of Eicher Motors. The higher revenue CAGR of Page Industries can be attributed to smaller base. In spite of lower revenue CAGR, Eicher Motors’s EBITDA and PAT CAGR is almost the same as of Page Industries.

Balance Sheet Numbers

(Figures in RsCr unless stated otherwise) Eicher Motors Page Industries
Paid-up Equity Share Capital 27.15 11.15
Reserves 3,429 445
Gross Block 3,255 214
Debt 0 30.85
Cash 569 6.79
EV 50,752 11,044
Debt-Equity ratio (x) 0.00 0.07

Note: Eicher Motors is in the automobile industry and has an asset-heavy business model. Its gross block (consolidated financials) is significantly higher than that of Page Industries. However, so is its market capitalization.

Cash Flow from Operations

(Figures in RsCr) Eicher Motors Page Industries
CY12 / FY13 496.02 87.14
CY13 / FY14 716.20 74.01
CY14 / FY15 1047.47 167.00

Note: Eicher Motors generates much higher CFO than Page Industries in relation to revenue size.

Stock Data

(Figures in Rs unless stated otherwise) Eicher Motors Page Industries
Face Value 10 10
Price (Feb-29-2016) 18,900 9,880
No. of Shares Cr 2.715 1.115
Free Float Shares Cr 1.225 0.547
Market Cap RsCr 51,321 11,020
Free Float Market Cap RsCr 23,154 5,400

Per Share Metrics

(Figures in Rs) Eicher Motors Page Industries
EPS TTM 347 199
CEPS TTM 474 219
Book value 1,273 409
Dividend per Share 50 72


  Eicher Motors Page Industries
P/e (ttm) 54.4 49.5
P/c (ttm) 39.9 45.1
P/b (ttm) 14.8 24.1
P/s (ttm) 4.3 7.1
EV/EBITDA 28.1 34.6
Dividend Yield 0.3% 0.7%
EV RsCr 50,752 11,044

Note: These valuations do not constitute advice to buy or sell the stocks discussed.

Stock Ownership Pattern

  Eicher Motors Page Industries
Promoter Stake 54.9% 51.0%
Free Float 45.1% 49.0%
FII Holding 26.6% 34.3%
DII Holding 4.9% 5.4%
Retail Holding 13.6% 9.3%
No. of FII Investors 483 122
No. of MF Investors 200 40
No. of Retail Investors 66,053 27,475

Note: Eicher Motors has a much higher absolute number free float shares, than Page Industries. It also has much higher number of FII, MF and retail investors, vis-à-vis Page Industries.

Trading Volumes and Stock Returns

  Eicher Motors Page Industries
Avg. Daily Volumes (NSE) Last 12 mths 78,800 12,100
Avg. Daily Turnover (NSE) Last 12 mths 141.3 16.5
Avg. Deliverable Volumes (NSE) Last 12 mths 49% 54%
Daily Volume as % of Free Float 0.6% 0.2%
Daily Volume as % of Retail Holdings 2.1% 1.2%
3-year Returns 582% 196%
Returns since Page Industries Listing 6184% 3535%
Beta 0.35 0.45

Note: Higher trading volumes for Eicher Motors can be attributed to higher number of free float shares and retail investors. Eicher Motors’s trading volumes are higher in relation to its free float and retails holdings too. Both stocks enjoy comfortably high deliverable volumes, highlighting high share of delivery-based buying.

We computed returns for both stocks since the listing of Page Industries on March 16, 2007. Eicher Motors has given far superior returns, not just vis-à-vis NSE Nifty 50, but vis-à-vis Page Industries Ltd. too, over the last 3 years, and since listing of Page industries.


Consolidated figures have been considered for Eicher Motors Ltd.

Eicher Motors used to follow the calendar year as its financial year. However, it will revert to the financial year and hence its current financial year will have 15 months, ending on March 31, 2016. The company’s FY15 figures in above tables should be considered as CY15, and so on.

Balance sheet figures are as at December 31, 2015 for Eicher Motors Ltd. and as at September 30, 2015 for Page Industries Ltd.

Beta computed for the period March 16, 2007, to February 29, 2016. Beta is relative to NSE Nifty 50 for Eicher Motors, and to Nifty Midcap 100 for Page Industries.

Stock ownership patterns as at December 31, 2015.

Relative Stock Price Performance over Last 3 Years

Eicher Motors has squarely beaten not just the Nifty 50 index, but also Page Industries over the last 3 years.

Eicher Motors and Page Inds v Nifty


This blog article is for educational purpose only, and not meant to be investment advice, or a recommendation or solicitation to buy, or sell, the securities named herein. It is based primarily on information publicly available, including company websites, published financial results, annual reports, analyst presentations, media reports, etc.

The author does not claim accuracy of his opinions and estimates as contained in this article. While the author has taken reasonable care to avoid errors or misstatements of facts, he does not accept responsibility for errors, if any, in this article.

In any case, the author will not be liable for losses, if any, arising from the use of this article.

About Nitiin A. Khandkar

Nitiin A. Khandkar is a Chartered Accountant and the Founder of Beyond Quant InvestTraining, an investment training venture based in Thané (Mumbai) India. Prior to founding Beyond Quant InvestTraining, he has had a multi-faceted career as a sell-side equity research analyst in India, a buy-side analyst and portfolio manager in US equities. He was Head of Institutional Equity Research desks, with a couple of sell-side firms in India. In the past, Nitiin has arranged one-on-one institutional investor road-shows for a few India-listed companies. He has also marketed Indian IPOs to foreign institutional investors and private equity investors. Nitiin was the winner of the Best IPO Analyst Award for 2009 by television channel Zee Business. He has worked in India and overseas. Nitiin remains passionate about Value Investing, and likes to read books on the topics. He continues to write on investing themes, and builds financial models on Indian companies. Nitiin also advises Indian start-ups/corporates on raising funds from VCs/PEs. Nitiin can be reached at [email protected] and [email protected].

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