Raymond - Stepped-Up Execution, Growth Trajectory Still Under-Appreciated: Systematix Initiates Coverage

Systematix Research Report

Raymond Ltd. finally looks well placed to realize its full potential and unlock shareholder value, post a change in management and a strategy rejig.

While past growth has been slow and the branded apparel business performance has been volatile, the current management team looks committed and energised to aggressively drive its agenda of go-to-market revamp, digital integration, cash generation and cost rationalisation.

Branded shirting, branded apparel (especially ethnic wear), garmenting and real estate are key growth engines, with margins likely continuing to inch up on continued premiumisation across segments, coupled with operating leverage benefits.

Recent initiatives on planned listing of the engineering business, subsidiarising the real estate business and consolidation of business-to-consumer businesses including apparel into Raymond are value-accretive moves, in our view.

While Raymond's manufacturing excellence, product quality and brand equity were never in question, execution and agility posed question marks, which the new leadership under Mr. Atul Singh (erstwhile Asia-Pacific head of Coca Cola) has begun to address.

The company’s new-found success in real estate and recovery in branded apparel segments inspire a lot of confidence on the sustenance of the upward growth trajectory witnessed in the recent past.

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