Avg buy price:227
quote:Raymond is a big company with a lot of stuff so obviously warrants a huge research note.I have studied the company thoroughly and instead of making a lengthy boring note,I am just going for the quintessence which will show one why this looks one heck of a buy in the given range.The company's focus last year was clearing its inventory which they have cleared to the extent of 77%-82(till date).Rest of the inventory would get sold in the next few weeks.The company also took the supply chain implementation which will improve its margins by 3-4% in the present fiscal.Solid business model,robust prospects,huge cash flow generations,125 acre thane land,attractive valuation makes Raymond a worthy buy at present levels.
Story:With a capacity of 38 million meters in wool & wool-blended fabrics, Raymond commands over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world.Its perhaps the only company in the world to have a diverse product range of nearly 20,000 design and colours of suiting fabric to suit every age, occasion and style.Raymond export its products to over 55 countries including USA, Canada, Europe, Japan and the Middle East.Raymond produces high-value pure-wool, wool-blended and premium polyester viscose worsted suiting in addition to half a million blankets and shawls.Its strong in-house skills for research & development have resulted in path-breaking new products raising the standard of the Indian textile industry.Company's relentless pursuit of excellence has earned it over 60% market share in worsted suiting in India..
4th quarter numbers:Net Sales grew by 13% during the 4th quarter to Rs 1069 cr.EBITDA for the quarter grew by 18% to Rs 110 cr and Margins improved by 40 bps.PBT before exceptional items for the quarter more than quadrupled to Rs 13 cr.Raymond retail network has crossed 900 store marks.The stores count as on march 31st,13 stands at 922 across all formats,including 41 stores in the middle east and SAARC region covering over 1.8 million sq feet of retail space.Raymond's textile division continues to witness good growth in the MBOs (Multi Brand Outlets), exports and TRS (The Raymond Stores) channels.
Annual Results:Consolidated net sales for the year increased 12% to 4069crs.PAT stood at rs .61crs vs 3crs mainly due to the effect of deferred tax asset provisioning.Cash flow from operations grew by 42% to Rs 326 cr in FY13.Net Debt of Rs 1342 cr as at Mar13 remained at similar levels as at Mar12.
Conclusion:2012-13 for many of its businesses was a year of consolidation with focus on liquidity profitability and growth.That too besides improving operational efficiency through supply chain initiative, cost rationalization and consolidation of back end infrastructure across all brands. These has given its investment a brand building, which will continue now which was pulled back a little last year along with retail expansion.Raymond has made significant investments in expansion and expects to reap benefits from the changes in channel sale mix.Raymond should deliver 28rs earning per share for fy14.The company historically has always traded in the PE multiple range of 15-25.To arrive at the target price of 420 bucks,I have taken the least from the PE trading band.It would be prudent to note that the company owns a cream land of 125acres in thane which conservatively could sum up to 2000crs(in a famous portal the management recently has given a guidance estimate of 3000crs for the land which they plan to sell/develop within this financial year).I have valued the company only on basis of its core business.If the land deal happens which is a very high probability,company would get completely re-rated.
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