Shares of Raymond Lifestyle Ltd gained 2 percent after Motilal Oswal Financial Services reiterated its 'Buy' recommendation for the stock. The brokerage also maintained a target price of Rs 3,000 per share, which indicates an upside of 49 percent from the previous session's closing price. The stock was trading at Rs 2,057 on the BSE at 11:34 am.
This bullish stance is based on the brokerage firm's analysis of the current market conditions and the company's growth prospects.
Follow our market blog for live updates
According to the Motilal Oswal report, there is a positive demand environment for retailers like Raymond Lifestyle, driven by the festive season and the ongoing wedding season. This they believe could translate into robust secondary sales growth, with expectations of a 12 to 14 percent increase. Additionally, the brokerage firm expects improved collections for Raymond Lifestyle in the third quarter of the current fiscal year.
While they acknowledged a potential lag in primary sales reflecting this demand improvement due to higher inventory levels in the channel, Motilal Oswal emphasises the extended wedding season as a key factor sustaining this positive momentum. This prolonged demand is particularly beneficial for Raymond Lifestyle, given that wedding wear constitutes a substantial portion of its overall revenue, estimated at around 35 to 40 percent.
Based on this analysis, the brokerage firm forecasts a compound annual growth rate (CAGR) of 9 to 11 percent in revenue, EBITDA ( Earnings before interest, taxation, depreciation and amortisation) and PAT for Raymond Lifestyle over the next four years. This growth trajectory has led Motilal Oswal to value Raymond Lifestyle at a price-to-earnings (PE) of 30x FY2027 earnings.
RLL is aiming for a 12 to 14 percent revenue growth and a 15 to 18 percent increase in EBITDA and PAT in the medium term. The branded apparels segment is identified as a key driver of this growth, supported by strategic initiatives such as increased exclusive brand outlet (EBO) expansion, the ramp-up of the Ethnix by Raymond brand, and the company's foray into the sleepwear and innerwear segments.
The company's financial performance, they believe is further supported by its return on capital employed (ROCE), currently at approximately 30 percent. The management anticipates further improvement in ROCE driven by better collections and moderated capital expenditure.
The brokerage also suggests that Raymond Lifestyle's strategic focus on expanding its retail network in the branded apparels segment while maintaining mid-single-digit like-for-like growth is expected to contribute significantly to its overall growth trajectory.
To capitalise on the evolving global manufacturing landscape, Raymond Lifestyle is also investing Rs 200 crore in capital expenditure over the next two fiscal years to enhance its production capacity.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
