Shares of Raymond Lifestyle Ltd, the demerged entity of Raymond Ltd, have declined by nearly 35% from their recent peak, but Motilal Oswal Financial Services (MOFSL) predicts a potential re-rating in valuation in the medium term. MOFSL has maintained a ‘Buy’ rating on the stock with a target price of Rs 3,000.
The growth drivers for Raymond Lifestyle Ltd are expected to be a recovery in branded apparel, expansion into new categories like sleepwear and innerwear, and successful execution in Ethnix by Raymond. MOFSL anticipates a 9-10% growth in sales, Ebitda, and profit over the period of FY24-27.
Since hitting a peak of Rs 3,100 in September, the stock closed at Rs 2,021.05 on NSE on Tuesday. MOFSL’s price target implies a 48% potential upside.
The festive and wedding season has led to improved demand for retailers such as Raymond Lifestyle, with expectations of double-digit growth in secondary sales and improved collections in Q3FY25. The company’s wedding portfolio contributes about 35-40% of its total revenue, positioning it well to benefit from the extended wedding season in the first half of FY26.
Raymond Lifestyle aims for 12-14% revenue growth and 15-18% growth in Ebitda and PAT in the medium term, with the branded apparels segment being a key driver of growth. The company plans to expand its exclusive brand outlets (EBOs) to 900 by FY27 and increase its presence in large-format stores and multi-brand outlets.
Despite the under-penetration of Raymond Lifestyle brands, the company operates at a 30% operational RoCE, with expectations of further improvement due to a better demand environment and controlled capex.
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