Investor's Eye: Update - Raymond (Strong results led by textile and apparel profitability)

Investor's Eye [January 23, 2014]  Sharekhan www.sharekhan.com

Summary of Contents   STOCK UPDATE Raymond Recommendation: Buy Price target: Rs387 Current market price: Rs302 Strong results led by textile and apparel profitability   Key points Raymond's Q3FY2014 consolidated revenues grew by 14.8%, largely driven by a strong growth in the garments (over 44.8% YoY) and the denim (over 36.9% YoY) businesses. The operating performance was boosted by efficiency gains driven from the organisation re-vamping and the consolidation of its supply chain across the businesses. In addition to the margin expansion, the exponential growth in the PAT was aided by a lower effective tax rate in Q3. Though the management sounded cautious about the slowing sales volume in December 2013, it is confident of the volumes picking up with the marriage season and sustaining the margin at the current levels. On the flip side, there is no meaningful progress on monetising the Thane land-bank parcel. Owing to a better than expected operating performance, we are revising our earnings for FY2014 and tweak our earnings estimate for FY2015 and introduce our FY2016 estimate. We expect a 23% CAGR growth in the operating profit over FY2013-16. We maintain our Buy rating on the stock with a price target of Rs387. Click here to read report: Investor's Eye   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.

Regards, The Sharekhan Research Team

 

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