Raymond - Q4FY13 results - Maintain Recommendation BUY; Target 520 - Anand Rathi

Raymond is one of the largest integrated manufacturers of worsted fabric in the world.

Highlights

- Net sales grew by 13% during the quarter and EBIDT grew by 24.5% though PAT saw tremendous decrease of 80.8% in the same period due to some reversal of deferred tax asset.

- EBIDT margins grew to 10.1% from 9.7% last year quarter and PAT margins declined from 0.3% to 0.1% in the same period.

On segmental front

- Textiles division sales were up 9% y-o-y led by domestic fabric sales and sales of Makers brand.

- Branded apparel growth was combined by Premium Apparel and Park Avenue.Excise removal benefits will also start showing in the numbers.

- On retail front 22 new stores were opened although same store sales was negative.

- Garmenting sales growth was 32% led by higher exports.

- Denim sales droped 2% on account of better realisations and low cost inventory.

- High value cotton shirting fabric sales grew by 25% led by higher realisation and growth in domestic markets.

- Other segments like auto components is still facing pressure though 8% growth was seen in Tools and hardware segment.

- The major trigger for the company of value unlocking for 125acres of land at Thane has been delayed and is not expected to happen before FY15 though the team is in place now and work is on.

- Going forward the company will continue to invest in brand building and retail expansion along with revival in consumer sentiment though at slower pace will help the financials to improve. We would like maintain our recommendation BUY along with the price target of Rs. 520.

Source : Equity Bulls

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