RAYMOND (INDIA ) PVT LTD [Year]

RAYMOND COMPANY (INDIA)PVT LTD

EQUITY RESEARCH REPORT

Raymond LTD

BY : Vivek Kumar
RAYMOND (INDIA ) PVT LTD [Year]

CMP:RS.281 TARGET: RS.485 TENURE: 12 MONTHS

HOLD

About company
Incorporated in 1925, Raymond is one of India’s largest branded fabrics
and fashion retailers. It has a strong brand portfolio with product
offerings across all price points. The operations of the group are
segregated into five main segments, viz., branded textile, branded
apparel, garmenting, high value cotton shirting and engineering
(consisting of tools & hardware and auto components). Over the years
the company has expanded its product range with an increasing focus on
product innovation and quality. The company has launched advanced
fabrics like ‘Technosmart’ and ‘Technostretch’ to offer smarter fabric to
the customers. These fabrics are made up of polywool fabrics with UV
protection, wrinkle resistance, high stretch and smooth touch, which are
ideal for crafting trousers, suits and jackets. Earlier Raymond has also
lauched a high-end Italian Regio collection suited for both occasion
wear and formal wear made from premium quality fabrics in five
different blends including wool silk, Super 180s, Super 150s, Super 130s
and Super 120s. With the ongoing emphasis on hygiene and safety,
Raymond has recently launched an anti-viral fabric named VIRA SAFE
which is also anti-odour to provide protection from bacteria and other
germs. Raymond has over 20,000+ SKUs with a price ranging from
₹300 to ₹3 lakhs per metre suitable for every individual need.
RAYMOND (INDIA ) PVT LTD [Year]

Investment theme
The steep correction in the stock price of Raymond provides the Contrarian
Investor an opportunity to invest in a high quality consumer franchise as we enter
the unlock phase of the Pandemic. The Demerger of its Lifestyle Business, rapid
strides taken in its Real Estate Business along with the consolidation of its FMCG
Business should in our view put to rest street apprehensions, if any, on its Future
Focused Strategy. Execution of its strategy on various non-core business verticals
in our view should only help hasten the recovery process going forward. Our
Scuttlebutt approach and channel checks during the past few months on footfalls
and conversion rates reinforce our conviction on the resilience of its prestigious
brands. The cost optimization exercise and re-calibration should help reboot
Raymond and propel it to navigate the covid crisis Digitization of Stores,
Rationalization of Capex and Reduction in Discretionary Spends would enable
Raymond to emerge stronger through the covid crisis.

Valuation
Due to lockdowns in the months of July and August, Raymond reported a poor
quarter for its textile company (except for the garment business). From September
onwards, the company is experiencing an uptick in the overall demand scenario
with the reopening of c.99% of its stores and the onset of For the holiday seasons
and for weddings. With overall market growth with an additional advantage of cost
savings, management has suggested a stronger second half. With margin expansion
and strong demand from domestic and export markets, the engineering business
was strong this quarter. Also, also, the The company has been able to sustain its
guidance that is evident from its success in this quarter on liquidity, working
capital and cost savings. In addition to enhanced operating efficiency, we expect
the business to sustain its overall financial health. We retain our recommendation
for Buy With a ~485 goal
RAYMOND (INDIA ) PVT LTD [Year]
RAYMOND (INDIA ) PVT LTD [Year]

Key highlights
→ Raymond launched its 7th tower in the month of August 2020 and have booked
around 49 units in this quarter taking the total booking to 1,012 units as on
September 2020. The company has been able to retain the real estate customers by
offering them bank subventions and provision to convert their 2 bhk flats to 1 bhk.
Physical visits at the sales office has increased to 60-70% of the pre-covid levels.

→ Raymond has rationalized its stores across the country by shutting down
inefficient stores to make its retail portfolio healthy. The current total store count is
around 1,577 divided into 405 EBOs, 58 MTM and 1,114 TRS.
RAYMOND (INDIA ) PVT LTD [Year]
RAYMOND (INDIA ) PVT LTD [Year]