Buy Raymond Lifestyle; target of Rs 1900: Motilal Oswal

Motilal Oswal's research report on Raymond Lifestyle

Raymond Lifestyle (RLL) reported a weak 3Q with modest ~2% YoY revenue growth. EBITDA declined 37% YoY due to operating deleverage, higher ad spends in branded apparels and adverse segmental mix. RLL’s secondary sales were healthy, which led to: 1) a decline in the Net Working Capital (NWC) to 89 days (from 97 days in 2Q) and 2) a net cash balance of INR0.6b (vs. net debt of INR5.7b in 2Q). RLL has corrected ~33% in the last three months and is trading at reasonable valuations of ~24x FY26 P/E. However, we believe improvement in execution and sustained growth recovery remain the key for re-rating. We lower our FY25-26E revenue by 2-5%. However, our EBITDA cut is higher at ~14-19% as we now build in a gradual margin recovery.

Outlook

We value RLL at a PE multiple of 25x on Mar’27E to arrive at our TP of INR1,900 per share. We maintain BUY on RLL, primarily on reasonable valuations.

For all recommendations report, click here