Raymond - 2QFY2013 Result Update - Finquest

Raymond Ltd Q2 FY13 results were above our estimates both on the topline and bottom-line front. In the quarter, company's net sales increased 13.6% Y-o-Y and 33.1% sequentially to Rs. 11.15 bn, as against our expectations of Rs. 10.14 bn. In the quarter, the EBIDTA declined 5.3% Y-o-Y, however, increased 414.7% sequentially Rs. 1.59 bn, as against our expectations of Rs. 1.28 bn, primarily on account of higher than expected margins in the Textile and Branded apparel business of the company. The Adjusted PAT came in at Rs. 569.5 mn as against our expectations of Rs. 470.6 mn, primarily on account of better than expected operating performance.

At the CMP, Raymond is trading at an Adjusted P/E of 13.8x FY13E and 9.9x FY14E EPS of Rs. 27.0 and Rs. 37.4 respectively. Over FY12-14E, we expect the company's sales and EBIDTA to grow at CAGR of 11.8% and 13.5% to Rs. 45.45 bn and 5.9 bn respectively. Raymond is trading at an EV/EBIDTA of 6.7x FY13E. We value the company at an EV/ EBIDTA multiple of 8.0x FY13E, a ~25% discount to its historical average; we maintain a target price of Rs. 480 per share, implying a potential return of 29%.

The company's ~ 125 acres Thane land could fetch Rs. 15.0 -18.75 bn (implying valuation of Rs. 244-305 per share) at conservative land valuation of Rs 120-150 mn per acre. However we do not factor the land valuation in arriving at our target price.

Source : Equity Bulls

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