Raymond Ltd. share price target

Positive quarter across segments: Despite a major portion of the weddingseason falling in Q4 (normally falls in Q3/Q4) Raymond Ltd. posted good numbersin the Q3FY19.

Domestic Volumes in Textile Business Drive Growth: Wholesale and MBO (Multi - brand outlet) growth for branded textiles stood at 20% and 13% while MBO sales growth of branded apparels stood at 53% in Q2FY19.

Performance Improves, Land Deal Key for Premium Valuation: A 4.5% growth in revenues on YoY basis (~ 8% excluding GST impact) and positive bottom-line for the first time in Q1 over 5 years (PAT of Rs. 19.2Mn) are significant positives.

The revenue growth for full year FY18 was largely in line with our estimates as the recovery in demand and the management's growth plans continue to take shape. Rebound in consumer demand, increase in channel sales and continued improvement in operational efficiencies saw revenue grow by 10% and EBITDA by 40%. Other segments, namely tools and hardware and auto components, continue to improve on operational front.

Results ahead of expectation; Consolidated revenues at Rs 16.3bnm up 11% yoy (+14% adjusted for GST); EBITDA margins improved by 160bps yoy to 9.2%; EBITDA at Rs 1.5bn, up 34% yoy; APAT at Rs 531mn, up 56% yoy Branded textiles grew 9% yoy to Rs 8bn, led by 36% growth in shirting division. Branded apparels grew by 12% yoy at Rs 4bn, led by extended EOSS and store expansion The key growth driver remains the branded apparel business, which is expected to clock a double digit sales growth over the next two years. We expect a consolidated revenue CAGR of 12% FY18-20E. The management expects to sustain the margin improvement...

We initiate a BUY with an SOTP price objective of Rs. 1,535 which represents an upside of 49% from the CMP of Rs. 1030 over a period of 18 months.

Continuing to perform well under the Re imagined strategy: Raymond's efforts in transforming the company, increasing product offerings, expanding throughout the country via the asset light model and efforts to improve efficiencyare bearing fruits. Consolidated revenues grew 14% YoY, and on like to like basis,(excluding GST impact) revenues grew 18% YoY.

Extending reach through asset light model: Raymond Ltd. has revamped 143 stores and added a net of 120 stores in the last 2 years. The main focus has been the addition of EBOs, mostly in the franchisee (nearly 75% additions) model, thus,enabling the company to extend its reach, particularly to the smaller cities, at lower costs. Currently, Raymond has a total of 1,080 stores spread across Tier I, II, III andIV cities in India.

Revenue rose by 12.76% to Rs. 1473.6 Cr in Q4FY17 when compared to the previous quarter. On the other hand it decreased by 2.5% when compared with Q4FY16.