RAYMOND - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 2.5

📊 Financials: Raymond has reported a quarterly loss (PAT -₹2.85 Cr vs ₹11.8 Cr previously), reflecting severe earnings volatility (-122% variation). EPS at ₹822 appears distorted due to accounting adjustments, not sustainable profitability. ROE at 294% is abnormally high and misleading, while ROCE at 1.17% highlights poor capital efficiency. Debt-to-equity ratio of 0.00 indicates a debt-free balance sheet, which is positive for financial stability. Dividend yield is 0.00%, offering no income support.

💹 Valuation: Current P/E of 69.8 is significantly higher than industry PE of 33.7, suggesting steep overvaluation. Book value ₹296 vs CMP ₹426 implies a fair P/B multiple (~1.44x). PEG ratio of 0.41 indicates valuation slightly aligned with growth, but earnings volatility undermines reliability. Intrinsic value appears lower than CMP, signaling caution.

👔 Business Model: Raymond operates in textiles, apparel, and branded fashion retail. Competitive advantage lies in brand recognition and diversified product portfolio. Risks include cyclical demand, margin pressures, and competition from domestic and global apparel players.

📈 Entry Zone: Technically, support lies near ₹420–₹440. CMP at ₹426 is below DMA 50 (₹510) and DMA 200 (₹564), indicating weakness. RSI at 22.0 suggests oversold territory, but entry is advisable only closer to ₹420 for margin of safety.

📌 Long-term Holding: Given weak profitability, high valuation, and earnings volatility, long-term holding requires caution. Investors should wait for sustained profitability and margin improvement before committing to extended positions.

Positive

• 📊 Debt-free balance sheet (0.00 debt-to-equity) ensures financial stability.
• 👔 Strong brand presence in textiles and apparel industry.
• 📉 RSI at 22.0 indicates oversold territory, potential for technical rebound.

Limitation

• ⚠️ Quarterly PAT loss (-₹2.85 Cr) signals severe earnings pressure.
• 📉 Weak ROCE (1.17%) reflects poor capital efficiency.
• 💸 No dividend yield (0.00%) offers no income support.
• 📉 CMP below DMA 50 and DMA 200 indicates technical weakness.

Company Negative News

• 📉 Decline in FII holdings (-0.18%) and DII holdings (-1.27%) indicates reduced investor confidence.

Company Positive News

• 📈 Strong brand recognition continues to support long-term positioning despite short-term earnings weakness.

Industry

• 👔 Textile and apparel sector trades at industry PE of 33.7, highlighting Raymond’s premium valuation.
• 📊 Industry growth supported by rising fashion demand and retail expansion, but competition remains intense.

Conclusion

⚖️ Raymond is fundamentally weak with poor return ratios and steep valuations despite brand strength. Entry is advisable only near ₹420 support zones. Long-term holding requires caution unless profitability improves and valuations normalize.

Would you like me to extend this with a peer benchmarking overlay against apparel peers like Aditya Birla Fashion and Arvind Ltd to highlight comparative valuation and efficiency?