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Aug 03, 2012, 12.53 PM IST
Way2Wealth has maintained neutral rating on Raymond, in its August 2, 2012 research report.
Way2Wealth has maintained neutral rating on Raymond , in its August 2, 2012 research report.
“Raymond, weak macro environment and depreciating rupee has impacted profitability of the firm during the quarter. Textile as well as branded apparel business showed weak performance during the quarter. This has lead to weak performance in topline improving by 9.5% and operating profit going down by 57% y-o-y for the quarter. We expect margin for the business to remain under pressure even for Q2FY13. In H2FY13 festive season demand, wedding season will improve outlook for the firm. Wool prices are expected to remain stable during the year however; depreciated rupee will put pressure on the margin. For textile business we reduce our topline estimates from Rs2051cr to Rs1989cr for FY13e and EBITDA estimates from Rs338cr to Rs270cr. We expect margin for the business to go down from 17% reported in FY12 to 14% in FY13e due to weak Q1FY13 numbers and deteriorating macro environment.”
“During the quarter the firm has accounted for Rs13cr VRS expenses towards employees of Thane plant. The firm has 3- 3.5 years of pay back towards VRS. Macro environment remains challenging. With weak monsoon conditions revival in H2FY13 looks anemic. Under such circumstances firm has stalled its expansion plant and expected to incur minimal capex of Rs150cr during FY13E. Out of this Rs50cr is towards new stores, Rs50cr is normal maintenance capex and Rs50cr is toward expansion in engineering division. Due to weak macro environment and increasing margin pressure we reduce our FY13e earnings estimates for the firm. At current market price the stock is trading at 15.3x FY13 earnings and 6xFY13E EBITDA. We downgrade stock from Hold to NEUTRAL due to weak macro scenario,” says Way2Wealth research report.
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Jun 18 2013, 22:39
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