Raymond Lifestyle Soars 3% on Motilal Oswal’s Bold 29% Upside Forecast!

Raymond Lifestyle (RLL) shares increased by 3.4% today, reaching a peak of Rs 2,089 on the BSE, encouraged by a positive outlook from the domestic brokerage Motilal Oswal, which forecasts a potential upside of 29% for the stock with a target pricing of Rs 3,000.

The brokerage’s assurance is based on RLL’s renewed commitment to expansion and prudent management of working capital, which could lead to a substantial revaluation in the medium term.

“Although RLL benefits from strong brand loyalty, its valuation has been hindered by poor execution in previous years (fluctuations in PAT growth from FY10-20). Nevertheless, RLL’s re-established focus on growth, coupled with its rigor in working capital management, could facilitate a revaluation over the medium term,” stated Motilal Oswal in its report.

The domestic brokerage believes that a recovery in growth within the branded apparel sector, the expansion into new categories such as sleepwear and innerwear, and the effective execution of Ethnix by Raymond are the main factors driving growth.

RLL is leveraging its strong reputation in the wedding wear segment, which accounts for 35-40% of its revenue, to broaden its reach in the Rs 14,000-15,000 crore unorganized ethnic wear marketplace through “Ethnix by Raymond.” With 136 outlets expected to yield Rs 100 crore in FY24, RLL aims to expand Ethnix to over 300 stores over the next 2-3 years, targeting Rs 350 crore in revenue while focusing on the Rs 15,000-30,000 price tier, avoiding designer collaborations to seize high-margin prospects and enhance market share.

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Additionally, the domestic brokerage emphasized that challenges in major garment-exporting nations are favorable for RLL.

The current instability in Bangladesh’s USD 50 billion garment market, along with the global move toward the China+1 strategy and free trade agreements (FTAs) with the UK, EU, and Australia, creates substantial growth prospects for RLL’s garment operations.

With Bangladesh potentially losing its cost advantage and LDC benefits by CY29, RLL is strategically positioned to enhance its competitiveness.

The festive and ongoing wedding season has also bolstered the demand environment for retailers like RLL, with projections of double-digit growth (12-14%) in secondary sales anticipated to yield improved collections in 3QFY25.

However, primary sales might exhibit demand enhancement with a quarter’s delay due to elevated inventory levels amidst demand weaknesses observed in the last 12-15 months.

Considering the increased number of wedding dates extending the season to 1HFY26, the demand trajectory is expected to remain strong, positioning RLL favorable as its wedding collection contributes 35-40% of its overall revenue.

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