RAYMOND - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.5
| Stock Code | RAYMOND | Market Cap | 2,630 Cr. | Current Price | 395 ₹ | High / Low | 784 ₹ |
| Stock P/E | 64.7 | Book Value | 296 ₹ | Dividend Yield | 0.00 % | ROCE | 1.17 % |
| ROE | 294 % | Face Value | 10.0 ₹ | DMA 50 | 461 ₹ | DMA 200 | 539 ₹ |
| Chg in FII Hold | -0.18 % | Chg in DII Hold | -1.27 % | PAT Qtr | -2.85 Cr. | PAT Prev Qtr | 11.8 Cr. |
| RSI | 25.7 | MACD | -16.7 | Volume | 2,44,589 | Avg Vol 1Wk | 2,19,580 |
| Low price | 394 ₹ | High price | 784 ₹ | PEG Ratio | 0.38 | Debt to equity | 0.00 |
| 52w Index | 0.32 % | Qtr Profit Var | -122 % | EPS | 822 ₹ | Industry PE | 33.3 |
📊 Raymond shows weak fundamentals for long-term investment. Valuations are stretched with P/E at 64.7 vs industry average of 33.3, while ROCE (1.17%) is extremely low, indicating poor efficiency. ROE appears abnormally high (294%) due to accounting anomalies rather than sustainable profitability. Dividend yield is 0.00%, offering no income support. EPS at 822 ₹ looks inflated but is not backed by consistent earnings, as quarterly PAT slipped into a loss (-2.85 Cr. vs +11.8 Cr. previous). Technicals are weak with RSI at 25.7 (oversold zone) and MACD negative (-16.7), suggesting bearish sentiment. Debt-to-equity is 0.00, which is positive, but fundamentals remain unattractive.
💡 Ideal Entry Zone: 370 ₹ – 390 ₹ (near 52-week low and below DMA 50/200). Current price (395 ₹) is close to support, but entry is risky given weak fundamentals.
📈 Exit Strategy: If already holding, consider reducing exposure near 450–470 ₹ (DMA resistance zone). Long-term holding is not recommended unless profitability stabilizes and ROCE improves. Holding period should be short-to-medium term only, with strict stop-loss near 370 ₹.
Positive
- 📌 Balance Sheet: Debt-free (0.00 debt-to-equity), ensuring financial stability.
- 📌 Technical: RSI at 25.7 indicates oversold zone, potential for short-term rebound.
- 📌 EPS: Reported EPS of 822 ₹ provides valuation visibility, though sustainability is questionable.
Limitation
- ⚠️ Efficiency: Very weak ROCE (1.17%), showing poor capital utilization.
- ⚠️ Profitability: Quarterly PAT slipped into loss (-2.85 Cr.).
- ⚠️ Valuation: High P/E (64.7) vs industry average (33.3).
- ⚠️ Dividend Yield: 0.00%, unattractive for income investors.
- ⚠️ Institutional Interest: FII (-0.18%) and DII (-1.27%) holdings declined.
Company Negative News
- 📉 Quarterly PAT turned negative, showing earnings pressure.
- 📉 Decline in institutional holdings (FII and DII).
- 📉 Profit variation (-122%) highlights volatility in earnings.
Company Positive News
- ✅ Debt-free balance sheet enhances financial resilience.
- ✅ Oversold technicals may provide short-term trading opportunities.
Industry
- 👔 Textile and lifestyle sector benefits from consumer demand but remains cyclical and margin-sensitive.
- 👔 Industry PE at 33.3 shows sector valuations are more moderate compared to Raymond.
Conclusion
🔎 Raymond is not a strong candidate for long-term investment due to weak ROCE, inconsistent profitability, and stretched valuations. Ideal entry is near 370–390 ₹ only for speculative opportunities. Investors already holding should consider profit booking near resistance levels and avoid long-term exposure unless fundamentals improve significantly.
Would you like me to also prepare a peer benchmarking overlay comparing Raymond with other textile and lifestyle companies like Arvind, Vardhman Textiles, and Page Industries to highlight relative strengths and safer long-term opportunities?