Raymond is present in the fast-growing discretionary and lifestyle category of branded textiles and
apparels. With the growing income, rise in aspirations to lead a luxurious life, greater discretionary
spending and favourable demographics, the segment of branded apparels and fabrics presents a tremendous
growth opportunity and Raymond with its brands and superior distribution set-up is very well
geared to encash the same.
Raymond’s Q2FY2013 results are ahead of expectations, revenues grew by 13.0% year on year (YoY) to
Rs1,115.1 crore (ahead of our estimate of Rs861.7 crore), but the OPM declined by 349 basis points YoY
to 14.3% on account of higher input prices, which we believe will turn in the company’s favour in the
coming quarters due to a fall in the wool prices. The company added 42 stores with an increase of
61,914 square feet in the retail space during the quarter.
With the festive season upon us, we expect Raymond to post a better performance in the coming
quarters. A likely improvement in the macro environment and its positive effect on consumer sentiment
should also help the company to post a strong bottom line growth in FY2014. Any development
with regard to the Thane land in the form of either joint development or disposal would lead to value
unlocking and provide significant cash to the company. At the CMP, the stock trades at 18.5x its FY2013E
EPS (excluding the value of the Thane land parcel) of Rs20.3 and 12.8x its FY2014E EPS (excluding the
value of the Thane land parcel) of Rs29.3.
No comments:
Post a Comment