Raymond Lifestyle Q2 Review - Subdued Growth In A Difficult Demand Environment, Hopes Remain High: Systematix

Systematix Research Report

Q2 FY25 showcased weak set of results however moving into H2 FY25 we can expect a good traction for Raymonds Lifestyle Ltd.’s products led by festivities and weddings (~45-48 wedding days in H2 FY25 versus ~11-12 wedding days in H1 FY25).

We expect Raymond to maintain its leadership position in the men’s wedding wear category through its branded textile and branded apparel businesses. Retail expansion in the branded apparel space coupled with premiumization, casualization and product development, strong expansion plans in emerging categories, increase in garmenting capacity accompanied by a strong order book shall drive growth going ahead.

Going forward, during FY25-27E we expect an average annual operating cash flow of ~Rs 6.9 billion (cumulative ~Rs 21 billion) and average annual free cash flow of Rs 6.3 billion (cumulative ~Rs 19 billion).

Considering the mid-single digit decline in revenue during H1 FY25 (versus our estimate of low single digit decline) we have marginally cut our revenue estimates revenue/ PAT estimates for FY25-FY27E by ~ 2%/ ~4 respectively.

We expect the company to make up for the mid-single digit decline in topline in H1 FY25 with a low to mid-teens growth in H2 FY25 led by festivities and strong wedding days.

We have factored in 8.8%/ 11%/ 19.2% revenue/ Ebitda/ Adjusted PAT CAGR over FY24- FY27E. We maintain our Buy rating with a revised target price of Rs 2,789 (versus Rs 2,845 earlier) based on SOTP valuation method, valuing branded textiles, branded apparel and B2B businesses at 11x/18x/9x Sept 2026E EV/Ebitda.

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