Buy Raymond Lifestyle; target of Rs 1425: Motilal Oswal

Motilal Oswal's research report on Raymond Lifestyle

Raymond Lifestyle (RLL) posted a 17% YoY revenue growth (5% beat), albeit on a low base. Growth was led by textile & apparel, though garmenting faced headwinds due to uncertainty around the US tariffs. EBITDA grew 29% YoY, though 35% below our estimate as margins got impacted by higher marketing spends and scale deleverage in garmenting. Managementis confident of a margin recovery in 2H. Although the overall demand environment remains challenging, there are signs of improvement, with stronger momentum in order bookings. Post a sharp correction (down 46% YTD), its valuation appears attractive at ~19x FY27E PE or ~1x FY27 EV/sales. However, we believe improvement in execution and sustained growth recovery remain key for re-rating. We cut our FY26-27E EPS by ~11-14% due to weaker margins and the impact of the US tariff-related uncertainty in the garmenting segment. We build in ~9% revenue CAGR over FY25-28E, with margins expanding to 12.3% by FY28.

Outlook

We value RLL at 22x Sep’27E P/E to arrive at our revised TP of INR1,425. We reiterate our BUY on RLL, primarily on reasonable valuations.