Shares of Raymond surged 8% in two days, hitting a high of Rs 2,179 on the BSE on Wednesday, ahead of the listing of its lifestyle business, Raymond Lifestyle (RLL), on the stock exchanges on Thursday.
Brokerages also see it as a transformational move for the company that is synonymous with legacy brands like Park Avenue, Raymond, ColorPlus and Parx.
Domestic brokerage firms Motilal Oswal and Ventura are optimistic about the company’s future prospects.
“Currently RLL has 5% market share in the Rs 750 billion menswear market, as the wedding season contributes 35-40% to the revenue (Rs 25-35 billion in FY24). The company continues to focus on premium wedding collections and aims to grow its market share to 6-7% with a revenue CAGR target of 15%. The marriage format also delivers 300bp higher gross margins, which should drive EBITDA growth, Motilal Oswal said in its report.
The market size of ethnic wear is expected to grow at a CAGR of 8%, however, considering the shift from unorganized to organized, the management expects the organized market to grow at 14% (vs unorganized 5%).
As of FY2014, it (RLL) has a presence in 114 stores with a revenue contribution of Rs 80 crore, catering to both occasion and casual ethnic wear. It aims to add 100+ stores annually, leading to a revenue potential of Rs 350 crore by FY27E.
“Enthused by the success of Ethnics, Raymond believes Slipz and Park Avenue innerwear will be new growth engines with rapid potential. Accordingly, Raymond is supporting the rollout of these brands with differentiated and aggressive marketing/distribution strategies,” Ventura said in his note on Raymond.
