Raymond shares jump 13%, hit fresh high as Jefferies initiates coverage with ‘Buy’ call; target at Rs 2600
时间:2024-06-26 11:12:50 阅读(143)
Shares of Raymond surged 13% in Tuesday’s session, hitting a fresh lifetime high of Rs 2,240 apiece, following Jefferies, a foreign brokerage, beginning its coverage on the stock with a ‘Buy’ recommendation. Setting a target at Rs 2,600, Jefferies expressed confidence that Raymond will showcase strong earnings growth. This growth can potentially lead to a revaluation, particularly after the demerger of its lifestyle division, said the brokerage.Raymond’s Business Landscape
The company’s flagship branded textiles business, accounting for 49% of its FY23 EBITDA, remains robust. Backed by an expansive network of 20,000 retail touchpoints, it’s set for single-digit growth in the medium term. Meanwhile, its apparel segment, housing brands like Raymond, Park Avenue, and ColorPlus, contributes 10% to the EBITDA. Sold via over 1,400 outlets and through wholesale distribution, this segment is tipped for double-digit growth in the coming years, added the brokerage.
Raymond’s expected 13% revenue CAGR over FY23-26E, coupled with a modest margin expansion, positions it for a 16% EBITDA CAGR. The projected 24% EPS CAGR and a consolidated ROCE of over 15% make it an attractive prospect for investors. With a BUY initiation and a sum-of-the-parts (SOTP) based price target of Rs 2,600, the company is set for a re-rating, especially post the demerger of its lifestyle business, said Jefferies. However, in its best case scenario, Jefferies saw the possibility of the target price for the apparel player at Rs 3,730, an 84% upside.
Risks and Investment ThesisLike any business, Raymond isn’t without its risks. A potential slowdown in demand, a surge in key input prices, or heightened competition could weigh on the company’s performance. However, with a turnaround, especially in terms of profitability and balance sheet health, over the last three years, Raymond seems well-prepared for the challenges ahead, according to Jefferies. The company has positioned itself to leverage its strong legacy and brand equity to maximize growth. The current valuations at a discount compared to peers make Raymond a compelling buy, with a projected upside of over 30%.
猜你喜欢
- JSW Energy initiates phase-wise commissioning of 810 MW ISTS-connected Wind Power Project in Tamil Nadu
- Nifty opens below 17100, Sensex gains 20 pts on Fri, Mar 24; Adani Power shares rise marginally
- KFin Technologies gets Sebi nod to float Rs 2,400-crore IPO
- Jammu and Kashmir Assembly, Panchayat elections likely after Lok Sabha elections 2024
- Nifty needs to hold above 17250, expect D-St to move in narrow range; check stocks to buy
- Kharif sowing of groundnut falls 0
- L&T Construction bags significant order for its Buildings & Factories business from HITES
- Nifty short-term uptrend intact; charts suggest upside potential in these two stocks
- Jefferies reveals striking differences- Best India portfolio stock skyrockets by 309%, worst China stock plunges 55%