Raymond Lifestyle up 3% as Motilal Oswal reiterates 'Buy'; targets 49% upside

Raymond Lifestyle Limited (RLL) witnessed a 3 per cent surge in its stock price, reaching Rs 2,089 on the BSE, following a positive outlook from Motilal Oswal. The brokerage firm has set a target price of Rs 3,000, implying a potential upside of 29 per cent. 

Renewed focus fuels growth optimism

Motilal Oswal’s confidence in Raymond Lifestyle stems from its revitalized growth strategy and disciplined working capital management. The brokerage highlighted that past sluggish execution had dampened valuation, but the company’s current direction indicates significant potential for a re-rating in the medium term.

"RLL's efforts in expanding categories like Ethnix and leveraging its brand strength position it well for growth," Motilal Oswal noted.

Ethnic wear expansion drives momentum

RLL is focusing on its Ethnix by Raymond brand, which caters to the Rs 14,000 crore unorganised ethnic wear market. Ethnix contributed Rs 100 crore to revenues in FY24 through its 136 stores. Plans are underway to scale this to over 300 outlets, aiming for Rs 350 crore in revenue within three years. This strategy targets high-margin opportunities while steering clear of designer-led tie-ups.

Tailwinds from garment exports and festive demand

Raymond Lifestyle stands to benefit from shifting global dynamics in garment exports. Challenges in Bangladesh’s USD 50 billion garment market, coupled with free trade agreements with the UK, EU, and Australia, position RLL to capitalise on emerging opportunities.

Additionally, the extended wedding season has boosted demand, with retailers reporting double-digit growth in secondary sales. RLL’s wedding portfolio, contributing 35-40 per cent of its revenue, places the company in a favourable position.

Robust outlook for FY25

As RLL capitalizes on its brand strength and explores new growth avenues, the stock appears well-positioned for a valuation re-rating. Motilal Oswal's bullish stance reflects confidence in RLL’s ability to navigate market challenges and achieve sustained growth.

Investors may look to this renewed momentum as an indicator of RLL’s future performance, with the stock poised to deliver attractive returns.