Over the last two years, Raymond shares have delivered over 260 per cent return. The multi bagger stock has recovered around 76 per cent from its 52 week low of Rs 717.95, which was hit on March 28, 2022. It was at a 52 week high of 1,644 on December 16, 2022.
The smallcap stock has seen a lot of re-rating in the past, according to Systematix.
The company turned around operations and achieved its stated objectives a year ago. There should be a presence of multiple triggers like real estate, ethnic wear, and FMCG, coupled with the new management's efforts to make them more relevant, to drive consistent growth and earnings going forward.
It has started its coverage with a 'Buy' rating, with a target price of Rs 1,832 and believes that Raymond is well placed to realize its full potential and unlock shareholder value, post a change in management and a strategy rejig. While past growth has been slow and the branded apparel business performance has been volatile, the current management team looks committed and energized to drive its agenda of Go To market revamping, digital integration, cash generation and cost rationalization.
Systematix said that branded apparel, especially ethnic wear garments and real estate, are key growth engines with margins likely to go up on continued premiumisation across segments, as well as operating leverage benefits.
Recent initiatives on the planned listing of the engineering business, subsidizing the real estate business and merging of B 2 C businesses including apparel into Raymond Ltd are some of the recent initiatives on the planned listing of the engineering business.
It added that it was adding value-accretive moves.
Quantum Securities believes strong demand for ethnic wear, clothing, shirting and branded apparel would help Raymond to clock 19.7 per cent CAGR revenue growth over FY 22 -- 24 E.
We also expect Raymond's EBITDA margin to be 290 bps higher than FY 22 -- 24 E due to strong growth in revenues and better margins from the garments, branded apparel and engineering segments. Raymond trades at a P E of 12.9 x FY 24 E PAT of Rs 634.7 crore. It added that we recommend a 'buy' rating on Raymond with a price target of 1987, a price target of Rs 1987, implying an annualized upside of 58 per cent from the current levels.
Raymond is India's largest integrated worsted suit manufacturer that offers end-to- end solutions for fabric and garments. It has some of the leading brands within its portfolio, Raymond Ready to Wear Park Avenue ColorPlus Parx Raymond Made to Measure and Ethnix by Raymond amongst others.
The company launched its first project TenX in the realty sector and recently launched a premium residential project The Address by GS housing.