Buy Raymond; target of Rs 784: FinQuest Securities

FinQuest Securities' report on Raymond

"Raymond's aggressive investments (advertising and renovation of stores) and the market sluggishness had taken a toll on the apparel business offlate but times are changing and we could expect the bottom-line recovery to continue. The core textile business has continued to do well while recovering from the sub-par margin performance in Q1FY15. Garmenting again has benefitted from the increased competitiveness of the Indian garmenting sector globally. The decline in cotton and wool prices should benefit the textile, apparel and denim businesses of RYMD in Q3FY15 in a big way. We believe the continued traction in most of RYMD's businesses on the back of domestic economic recovery and an expected sharp fall in raw material costs Y-o-Y could spring a positive surprise in Q3FY15 numbers."

"On the back of good set of numbers in Q2FY15 and a visibility of better performance going ahead we value the core equity of RYMD at a P/E of 15x FY15E earnings, which gives us a value of Rs 440/share while we value the land bank at Thane at 25% discount to the expected market value which comes to Rs 344/share giving a combined price target of Rs 784 for FY15E. We expect a good set of results from RYMD in the current quarter i.eQ3FY15 which could lead to a re-rating of the stock and take it new levels. Any stake sale of its non-core businesses like the Tools and hardware business or the auto components or any new development on the land parcel development/sale could be a major positive for the stock price. Buy the stock with a target price of Rs 784," says FinQuest Securities research report.

For all recommendations, click here

Read More