Raymond Lifestyle - Core business Demerged

[First_Principles]

Hello Everyone,

I recently evaluated Raymond Lifestyle. The short version of my longer article is this :

New Listing Alert: On Sept 5, 2024, Raymond Lifestyle Ltd. (RLL) debuted after a long-awaited spin-off from Raymond Ltd., signaling a fresh start for the brand.

Internal Turmoil: Governance concerns have haunted Raymond Ltd. for over 8 years, fueled by a public father-son feud. There were other related party concerns also. But this could be an interesting opportunity for reasons described below.

Hidden Value? Despite CG issues, RLL’s stock has shown multiple instances of doubling or more over the past 14 years. This is important because I was under the impression that CG issues lead to poor stock performance, which is true, however, there were periods in the last 14 years where the stock did quite well. It made me question how to think about companies with CG issues.

De-merger Dynamics Unpacked: The spin-off led to a wave of selling by index funds, sparking potential opportunities for investors.

Index Inclusion Watch: RLL may find its way into the Nifty Smallcap250 Index in early 2025, potentially triggering further fund flows—but that’s not enough. We need a fundamental improvement in the business to get a re-rating on the business.

A Fresh Approach: With a revamped management team and an asset-light franchise model (let’s see how that goes), RLL is optimizing costs, improving EBITDA margins, and focusing on core segments for growth.

Valuation Insights: Current valuations suggest a range of ₹10,000 Cr to ₹20,000 Cr, with a Market cap of 13,500 Cr, we believe it is trading at the lower end of the valuation band.

What’s Next? Is this a turnaround story or a classic bull-market flash? We need to track the business and how it progresses under the new management team.

RISKS

1. Sales growth of the core business has been slow and it competes with High Quality competitors in each of the 4 business segments.
2. Error in estimating valuations. The company may NOT be as cheaply priced as we estimate.
3. Competition
4. Promoter decides to interfere and change strategy set by the new management team.
5. Other Risks that pertain to all companies…

[dark_hunter]

Raymond%20Lifestyle%20Ltd%20-%203rd%20Sep%202024_638609646980452307.pdf

[Dhruv_Bajaj]

Have made a video analysing the company
Link-

Raymond Lifestyle: Detailed Stock Analysis | Smart Sync Services #investing #stockmarket

[amansingh]

I think this is the full article. Just released 2 days back so upto date : Is 'Raymond Lifestyle' the Next Big Value Bet? (5 minute read)

[UnknownLead]

Systematix initiates coverage on Raymond Lifestyle after demerger, assigns a BUY rating with a target price of Rs 2,845 (vs. earlier fair value of Rs 2,293) for its lifestyle business on SOTP-based method, valuing branded textiles, branded apparel and B2B businesses at 11x/18x/9x Sept 2026E EV/EBITDA.
Link to report

[UnknownLead]

Slightly poor results from Raymond Lifestyle but management had indicated in Q1 concall that Q2 will show slight recovery and Q3 & Q4 of this year will be very strong due to weddings and festive season.

Also an exceptional item, Stamp Duty on demerger of around 58 crore has been paid which further lowers the PAT.

Results

[yogeshkhadse]

Raymond Lifestyle Shareholders Urged To Reject Gautam Singhania's Appointment...

[sougataG]

I am not sure how reliable/ ethical these proxy advisories are. In the case of ICICI Direct delisting, they advised to vote for it. And we all know how the delisting is facing multiple legal challenges.

ICICI Securities delisting: Proxy advisors IiAS and ISS recommend voting for...

ICICI Securities Delisting Saga: NCLAT Issues Notice, Multiple Legal...

[newone]

Gautam Singhania appointed as executive chairman of Raymond Lifestyle with...

[UnknownLead]

Money for fractional shares created due to demerger has been paid to shareholders. Received 1222 for 0.60 of a share. So, maybe the trust realized around 2036 at average and with that the selling of bulk of 1.51 percent stake in company is also done as mostly it would have been fractional shares.

[Varsh]

Motilal Oswal has begun coverage of Raymond Lifestyle (RLL) with a buy rating and a target price of Rs 3,000

Growth Drivers
1. Revenue Growth:
• Revenue growth expected at 10-15% CAGR over the medium term, driven by:
• Continued demand during festive and wedding seasons.
• Urbanization and increased disposable income, particularly in Tier 2-4 cities.
• Weddings, contributing ~35-40% of revenue, to remain a key growth pillar with an expanded calendar extending into FY26.
2. Profitability Upsurge:
• EBITDA and PAT growth forecasted at 12-15% CAGR as Raymond focuses on operational efficiency, supply chain optimization, and leveraging economies of scale.

Retail Network Expansion
• Targeting 750-800 Exclusive Brand Outlets (EBOs) by FY27 (~25% CAGR), with further focus on an asset-light FOFO model to mitigate upfront costs and accelerate growth.
• Increased presence in smaller towns (Tier 2-4 cities), leveraging untapped demand.
• Larger formats and multi-brand outlets (MBOs) to enhance customer experience and cross-selling opportunities.

Strategic Initiatives
1. Product Diversification:
• Expansion into western wear and affordable sleepwear under “Step by Raymond,” with pricing in the sweet spot of ₹599–₹1,599 to attract value-conscious customers.
• Innerwear growth through the Park Avenue brand, targeting premium and mid-segment markets.
2. Focus on Core Strengths:
• Branded apparel (e.g., Park Avenue and ColorPlus) continues to be the backbone, supported by enhanced collections and modernized designs.
• Custom tailoring services to reinforce Raymond’s premium positioning.

Distribution Strength
• With a strong base of 463 EBOs, Raymond Lifestyle is targeting mid-to-high single-digit same-store sales growth through better merchandising, customer loyalty programs, and enhanced in-store experiences.
• Expanding its distribution network to include e-commerce platforms and deeper penetration into modern trade channels.

Tailwinds
1. Expanding Market Share:
• Rising demand for premium branded apparel and the increasing shift toward organized retail.
• Growth in innerwear and sleepwear categories, capturing unorganized market shares.
2. Operational Efficiencies:
• Improved manufacturing and supply chain optimization driving better margins.
• Focused cost-control measures to enhance profitability.
3. Industry Dynamics:
• Rising fashion consciousness among younger demographics and increasing wedding expenditures support long-term growth.

Challenges to Monitor
• Competition in branded apparel from both domestic and global players.
• Potential economic slowdowns or inflation impacting discretionary spending.
• Execution risks in achieving aggressive retail expansion targets.

Alternative Valuation & Investment Thesis
• Valuation: At ~28x PE, the company is attractively positioned compared to peers, with room for rerating as it continues delivering on growth and profitability .
• Investment Thesis: Raymond Lifestyle represents a well-balanced growth opportunity with a strong legacy, brand equity, and strategic initiatives across product lines, retail formats, and geographies.

Link:- MORNING_INDIA-20241226-MOSL-MI-PG010.pdf (1.1 MB)

Disc :- tracking

[JJoy]

Looks like there is a lot of FII, DII and other investors like Mukul Agarwal and Porinju involved as investors.

[JJoy]

Just doing a common sense check, the market capitalisation of Raymond Lifestyle is ₹ 12,679 Cr at PE 25 and Trent is ₹ 2,53,047 Cr trading at PE 186.

Trent has 875+ stores

Raymond plans to open 650+ stores as per investor presentation.

Raymond was in business much before Trent, they do have brand recognition, well everyone has good understanding of their Quality, then where is it going wrong ?

Will Raymond Lifestyle be able to pull off a Trent ?

[StonePitbull]

@JJoy

then where is it going wrong ?

relative valuation requires some resemblance in growth numbers. One doesn’t simply slap a multiple.

Michael Mauboussin says “You have to earn the right to use multiples. When I say you have to earn the right that means that if you say 20 times revenue is appropriate for XYZ, you understand the economic implications of what has to happen for that to make sense, otherwise you just lost your ground.”

[JJoy]

Thanks for your feedback, but it seems looking at the future growth (tripling stores in 3 years - capex expansion) initiatives the market is not pricing it properly. Yes, currently there is very little comparison between Trent and Raymond, but then there are similarities.

Raymond Lifestyle CEO On Post-Listing Plans, China Plus One & Competition In Garment Industry

Look at how the gurus explained it in very simple terms for Trent and Pantaloons below. Now make a comparison between the store nos between Trent vs Raymond that I guess tells a story.

Buying 9% of Trent and 5% of Pantaloons and Meeting Noel Tata | Samir Arora & Dinshaw Irani

“With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future.” — Carlos Slim Helu

Link to detailed Shankar Nath’s Newsletter on Raymond Lifestyle.
Raymond Lifestyle: The Incomplete Man (Since 2024).pdf (3.4 MB)

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” — Phillip Fisher

[sushilkc]

I think market wants to see the execution of this plan and the results. Usually a new promoter or a new Industry gets benefit of doubt and market gives high valuation in anticipation but none of this is applicable in case of Raymond Lifestyle so it appears this will get high PE only if the company is able to show the growth for few quarters.

[Folok]

Upon researching I found the opportunity profitable and averaged my buy-ins during Oct-Nov. Since then the stock price has declined further and I am revaluating the situation whether I should buy more. In the below article, I explore just that including potential opportunity and risks of RLL in the backdrop of a muted Q2 FY25, four months post its demerger and subsequent listing on the exchanges.

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[abhikjha]

Nicely written. Congratulations for your 1st article. Completely agree with your views. RLL is one of highest weighted stock in my pf and I am very bullish on this, though next 2 quarter results will set the course for rerating. I think if results turn out to be good, upside is huge and if it doesn’t, market in my view has already priced it in to a large extent.

[newone]

Nice analysis. What do you feel about the set of market professionals that GS has brought in for all divisions for operations ? They need some time to design and implement strategies of course. Do you think that would add to more growth?

[SALIL_HARLIKAR]

Raymond is a brand which is looked upon as a wedding/occassion brand that is seasonal.
Whereas, Trent is able to cater a particular mass segment (cheap+fancy) for regular wear. Repeat customer chances are high here.

This is my perception. Raymond won’t get the current valuation of Trent. I may be wrong.