Fo­cus on Branded Busi­ness to Help Ray­mond Scale Up

As­set-light model; branded tex­tile/fab­ric busi­ness to also ben­e­fit from the new strat­egy, and realty busi­ness could act as an earn­ings trig­ger

The Economic Times - - Smart -

Ray­mond re­ported a sharp jump in prof­its, which hit a speed breaker due to de­mon­eti­sa­tion. But things are get­ting bet­ter now. It has guided for se­quen­tial 4% sales growth and 250 bps EBIDTA mar­gin jump to 9%.

The stock has cor­rected 15% af­ter the note ban last Novem­ber, mak­ing it a good buy. The stock is trad­ing at 13 times es­ti­mated FY19 earn­ings and 0.6 times sales. The pro­mot­ers have been con­sis­tently in­creas­ing their hold­ing in the com­pany for the past sev­eral quar­ters, giv­ing fur­ther con­fi­dence. The real es­tate busi­ness which could act as an earn­ings trig­ger — the Street has not fac­tored this — is ex­pected to gen­er­ate rev­enues sooner than an­tic­i­pated.

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