We are seeing solid growth in core business while a turnaround in non-core businesses like tools & hardware and auto components will be a key growth drivers future, says Sumit Bilgaiyan, Founder of Equity99
Sumit Bilgaiyan
Raymond posted a 61% growth in profit driven by margin expansion in Q4FY18. Margins expanded on higher sales of branded apparels and textiles coupled with lower promotional and ad spends. Revenue increased by 11% on a YoY basis.
Raymond’s has undertaken a series of strategic initiatives to increase growth and improve profitability. High growth of the branded apparel segment is the primary driver, which in turn is supported by high advertisement & selling expenses for brand building. As the brands sustain on their own, we expect advertisement & promotion spends to moderate and the EBIDTA margins of this segment to improve gradually from the current negligible levels.
We are seeing solid growth in core business while a turnaround in non-core businesses like tools & hardware and auto components will be a key growth drivers future. We are recommending a buy with target price of Rs 1350.
Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.