Raymond Lifestyle Ltd, the demerged retail and lifestyle business of Raymond Ltd, is all set to make a market debut on Thursday September 5. Raymond shares went ex-Lifestyle business last month and the listing of lifestyle business as separate entity is seen unlocking shareholder value.
Raymond Lifestyle may scale up the branded apparel segment by replicating TRS's success to other brands, expanding EBOs through asset light model, said Antique Stock Broking as it anticipates 250-300 stores of each brand in the next three years.
"RLL's focus on the wedding portfolio (35%-40 per cent of revenue, directly and indirectly) should enable it to deliver 15 per cent CAGR over the medium term driven by differentiated premium products and expansion of ethnic store network. In our view, key monitorable would be scaling up of branded apparel and the ethnic portfolio, and the success in new categories (inner wear and sleep wear)," the brokerage said.
It sees Raymond Lifestyle delivering revenue CAGR of 13 per cent and Ebitda of 15 per cent over FY24-27E. It sees fair valuation for Raymond Lifestyle at Rs 18,000 crore on FY27 estimates.
Raymond Lifestyle recorded sales of Rs 2,550 crore from the wedding business in FY24. Chief Financial Officer at Raymond Group, Amit Agarwal, expects Raymond Lifestyle to double its Ebitda to Rs 2,000 crore in the next three years. "We are also looking towards a 12–15 per cent sales growth in the lifestyle sector. The aim for Raymond Lifestyle would be to capture around 7 per cent market share in the dynamic Men’s-Wear wedding market by 2027,” he said.
MOFSL, which attended Raymond Lifestyle's investor conference said Raymond Lifestyle incurred a capex of Rs 100 crore in FY24 to increase the capacity to 10.7 million pieces and will incur an additional capex of Rs 100 crore in FY25, which could generate Rs 400 crore of incremental revenue by FY27, which is 2 times its asset turnover ratio). Assuming Ebitda margin of 10 per cent, it can generate Rs 40 crore incremental Ebitda with 16 per cent incremental return on capital employed (RoCE) post-tax, it said.
"We model 11 per cent revenue growth over FY24-27," MOFSL said.
Raymond Lifestyle's Vapi facility in Gujarat is the largest (112.6 acres) and contributes to 45 per cent to the suiting segment’s revenue. It has the capabilities to craft high quality suiting fabrics across price points, InCred Equities said. It’s other two facilities for its suiting business are located at Jalgaon (38 acres) and Chhindwara (100 acres).
"With a target of adding 300 new Ethnix stores over the next two-to-three years, the company is positioning itself to capitalise on rising demand for ethnic wear in India, particularly from wedding-related demand. The management targets 1.5 times growth by FY27F and 2.3 times growth by FY30F over FY24 levels, from the wedding business, highlighting the huge potential in this segment to drive substantial revenue growth," it said.