The brokerage’s confidence stems from RLL’s renewed deal with progress and disciplined working capital administration, which might drive a big valuation re-rating within the medium time period.
“Whereas RLL advantages from robust model affinity, its valuation has been impeded by sluggish execution up to now (volatility in PAT progress over FY10-20). Nonetheless, RLL’s renewed deal with progress, together with working capital self-discipline, might result in a valuation re-rating over the medium time period,” mentioned Motilal Oswal in its report.
The home brokerage agency believes {that a} progress restoration within the branded attire section, the scale-up of newer classes like sleepwear and innerwear, and the profitable execution in Ethnix by Raymond are the important thing progress drivers.
RLL is capitalizing on its robust marriage ceremony put on model recall, which contributes 35-40% of its income, to increase within the Rs 14,000-15,000 crore unorganized ethnic put on market by means of “Ethnix by Raymond.” With 136 shops producing Rs 100 crore in FY24, RLL plans to scale Ethnix to over 300 shops within the subsequent 2-3 years, focusing on Rs 350 crore in income, specializing in the Rs 15,000-30,000 worth vary whereas avoiding designer-led tie-ups to seize high-margin alternatives and improve market share.
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Additional, the home brokerage agency highlighted that the headwinds in main garment-exporting nations bode nicely for RLL.
The continuing turmoil in Bangladesh’s USD 50 billion garment market, mixed with the worldwide shift to the China+1 technique and free commerce agreements (FTAs) with the UK, EU, and Australia, presents a big progress alternative for RLL’s garmenting enterprise.
With Bangladesh dropping its low-cost benefit and probably its LDC advantages by CY29, RLL is well-positioned to realize competitiveness.
The festive and ongoing marriage ceremony season has additionally improved the demand atmosphere for retailers similar to RLL, with expectations of double-digit progress (12-14%) in secondary gross sales, which ought to end in improved collections in 3QFY25.
Nonetheless, major gross sales might replicate demand enchancment with 1 / 4’s lag owing to larger stock within the channel amid demand weak spot up to now 12-15 months.
Given a better variety of marriage ceremony days extending the season to 1HFY26, the demand momentum is predicted to stay sturdy, which locations RLL in a candy spot as its marriage ceremony portfolio accounts for 35-40% of its whole income.
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(Disclaimer: Suggestions, options, views and opinions given by the specialists are their very own. These don’t symbolize the views of the Financial Occasions)
