Should You Buy Raymond Lifestyle Shares After Its Listing? I Raymond Lifestyle Share News
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00:00that we are awaiting a conversation with the management of Raymond Lifestyle and that will
00:05come to you at 11.40 but on that note incidentally we've got a query the first one today from Kunal
00:10who's asking about Raymond Lifestyle what's the call on this counter for context it was listed
00:17today the first step of the demerger from Raymond that will split into three separate entities
00:23Avinash it listed at over 3000 and then since then there's been selling I guess to a certain
00:29extent one would assume that this is profit-taking if you have the opportunity to buy though would
00:34you do so right now or do you wait for some time I think Alex it's always better to you know wait
00:41for some time because typically whenever a demerger happens I think the stock takes some time to
00:46settle down the markets would like to await the commentary from the management and look at hard
00:52numbers you know at least the financial data point numbers from this independent entity although one
00:57thing is very clear that they have a very strong business model right from the fabric to the
01:01garmenting and there is a very big opportunity in the urban lifestyle you know space I would
01:07believe that there is definitely good value to be made but I think it's better to wait for the
01:11management to come out clarify their position and I think look at at least the next one or two
01:16quarter numbers because that is going to rewrite the stock in the longer term in the short term
01:20the stock is going to be purely governed by demand supply you know mechanics and I think
01:25currently what we are seeing is a little bit of profit booking from the initial listing price
01:29so longer term yes but short term I think the stock will be volatile yeah volatility brace
01:34for volatility by the way investors in Raymond have gotten four shares for every five shares held
01:40in Raymond limited a lot of the new investors are trying to get into this counter of course but
01:47let's listen into what the management had to say to my colleague Mahima
01:51I think it's a very momentous occasion obviously for us very exciting times now it's obviously not
01:56prudent on me to put a number to it because finally it's the investors who put a number and
02:01the price discovery happens accordingly but I can tell you the opportunity which we have as we are
02:05unlocking this Raymond lifestyle limited as a separate entity is that we are maybe the only
02:10business in this space which gives the opportunity to investors to invest behind four verticals at
02:17the same time one is our core branded fabric business which has been there for you know
02:22almost 100 years now we have taken our EBITDA margins to a record 20 percentage plus which is
02:28almost like a FMCG margin EBITDA margin and that can be a comparative you know indicator in mind
02:34by putting valuation to it another business that has transformed really in the last two years the
02:39branded apparel business where again we've reached a EBITDA margin of you know good double digits
02:44and the business has grown at a very high pace and that's where we're talking of another 800 plus
02:49stores over the next three years so the headroom to grow is immense for us there in terms of both
02:53revenue and then improvement on EBITDA margins also would happen then comes the third vertical
03:00for us where we are moving in a pretty big way is ethnic wear now no wedding in India is complete
03:05without Raymond in any case now there's this big fat Indian wedding which is taking shape over the
03:09last decade ethnic wear is coming to its own and we've launched this brand ethics by Raymond
03:14which again would scale up to almost 400 stores over the next three years and that will add its
03:19own value in terms of valuation and again there can be a comparative indicator one can take into
03:25account and I think we've created a very good package out there in the world the signs are
03:29very very good for us there then comes our fourth business which is a b2b garmenting space
03:36where we have the world's best facilities in terms of 12,000 skilled workers churning out
03:42top end garments for the best global brands we've seen huge tailwind out of China plus one
03:49Bangladesh plus one is playing out we are the world's only vertical integrated player out there
03:55and again that's a disruptive growth business for us so if you put together these are four
04:01different verticals which given a great opportunity for growth across and if you put a valuation I
04:07would just say put comms to each and every vertical and then you'll see the valuation which
04:11Raymond has absolutely you know Mr. Katari you're also going big when it comes to the ethnic wear
04:17business and roughly as for my calculations the margins stand at 22 to 23 percent right now but
04:23you know the margins can have a lot of headroom when it comes to the ethnic space you know even
04:28if you compare it to your competitors so I want to understand that going forward from a long-term
04:33perspective where will the margins go at from this 23 percent mark to from a longer term perspective
04:40let's say by FY28 and what will be the levers exactly so I'll tell you first of all the EBITDA
04:45margins currently would be not there's not the right way to look at EBITDA margins because it's
04:49a business we just started we'll be in an investment phase for scale up on this business for the next
04:53three odd years I can tell you what is a good indicator right now actually the gross margins we
04:57have our gross margins are much much higher I mean I would say we are the closest to the best in
05:03class in terms of gross margins and this is despite having a much more superior fabric
05:08much more differentiated designs so what we have done a very good job along with the design package
05:13the retail stores I think we have made a very good job of our sourcing there so I think at
05:17this stage when the brand is in a large investment phase in both store expansion as well as marketing
05:22the best indicator to see is your gross margins and they are way up there in best in industry and
05:27we are very confident once we have done this investment phase is over and we've scaled up
05:31to foreign stores then our margins will be best in class okay and in terms of your new businesses
05:36that you're undertaking the innerwear and the sleepwear business what kind of margins you're
05:40expecting there again I would say the whole strategy is built on while scaling up apparel
05:47garmenting strengthening fabrics building the new so when you're looking at new businesses
05:52I think my first focus is to really scale up the businesses to a multiplier level
05:56one thing I can assure is that none of these businesses would be such that they'll keep on
06:01bleeding beyond three years they will not they will be very very healthy margin business in three
06:05years time there are two very different strategies sleepwear is a strategy where we are looking at
06:09disrupting the value part of the segment okay and there the cost uh really the expense would be
06:16really more behind distribution and pricing and we have given a very good product and affordable
06:21pricing and I think that itself will drive growth we may not do a very large spend on let's say
06:26marketing for a long term because that is also a multi-brand distribution innerwear would be
06:30again a mix of both multi-brand distribution and our own stores so I think both the businesses
06:36again along with ethnics building the future vectors of growth large expansion we will
06:42stabilize we'll break even in three odd years time and we'll stabilize at very healthy margin