Mehabe score: 4 G Factor: 2 Piotski Score: 3 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 2 and Piotski score of 3.
Description
Raymond Limited incorporated in 1925 is a diversified group with interests in Textile & Apparel sectors as well as presence across diverse segments such as Real Estate, FMCG, Engineering in national and international markets 55+ Countries including the USA, Europe, Japan & Middle East. The Company has a retail network of 1,638 stores, including 1,589 stores in about 600 towns and cities in India and 49 overseas stores in nine countries. It is one of the largest vertically and horizontally integrated manufacturers of worsted suiting fabric in the world.
Main Points
Business Segments
The company operates in two major segments: lifestyle and engineering. Lifestyle includes suiting, garments, apparel, denim, and shirting. Engineering includes tools and hardware and automotive components. India contributes 84% of the Revenue while the Rest of the world contributes 16%.Site:RAYMONDMain Symbol:RAYMOND
Stock trades at 437.0, above its 50dma 394.48. It also trades above its 200dma 362.13. The stock remains bullish on techicals
The 52 week high is at 449.80 and the 52week low is at 233.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -7.81% over past five years.
– has a low return on equity of 0.67% for last 3 years.
-Earnings include an other income of Rs.201.38 Cr.
-Debtor days have increased from 78.86 to 101.46 days.
Competition
– The industry trades at a mean P/E of 24.3x. Garware Tech. trades at the industry’s max P/E of 44.73x. RAYMOND trades at a P/E of x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 8.0. RAYMOND has a G-Factor of 2 and Piotski scoreof 3.
– Average 1 month return for industry is 9.5%. The max 1- month return was given by Welspun India: a return of 19.3 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1366.0 cr compared to Rs 1279.0 cr for period ended Mar 2020, a rise of 6.8%
Company reported operating profit of Rs 155.0 cr for period ended Mar 2021, operating profit margin at 11.3 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Mar 2021 was Rs 8.48 compared to Rs 3.26 for previous quarter ended Dec 2020 and Rs -10.55 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 3446.0 cr for period ended Mar 2021 vis-vis sales of Rs 6482.0 cr for the period ended Mar 2020, a fall of 88.1%. The 3 year sales cagr stood at -16.4%.
Operating margins shrank to -2.0% for period ended Mar 2021 vis-vis 8.0% for period ended Mar 2020, contraction of 1000.0 bps.
Net Profit reported at Rs -297.0 cr for period ended Mar 2021 vis-vis sales of Rs 196.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 702.0 cr for period ended Mar 2021 vis-vis Rs 373.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -13.0% compared to 1.0% over the last 3 Years. – The stock has given a return of 64% on a 1 Year basis vis-vis a return of -21% over the last 3 Years. – The compounded sales growth on a TTM bassis is -47% vis-vis a compounded sales growth of -16% over the last 3 Years. – The compounded profit growth on a TTM basis is -277% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 6.43% vis-vis 6.39% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 40.44% vis-vis 40.98% for Dec 2020
Conclusion
– has reduced debt. – has low interest coverage ratio.
-The company has delivered a poor sales growth of -7.81% over past five years.
– has a low return on equity of 0.67% for last 3 years.
-Earnings include an other income of Rs.201.38 Cr.
-Debtor days have increased from 78.86 to 101.46 days.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 394.48 and is trading at 437.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
