Raymond Stock Check: Is It Time to Buy Now That It's Down 13% in November?

 Raymond Stock Check: Is It Time to Buy Now That It's Down 13% in November?

Raymond Stock Check: Is It Time to Buy Now That It's Down 13% in November?

This year, Raymond has shown a great deal of volatility, with positive returns in five of the first eleven months and negative returns in the remaining six. In November, it fell by almost 13 percent, resulting in losses for the third month in a row since September.

This month, the textile business Raymond has been in the headlines due to rumors that Nawaz Modi, the estranged wife of chairman Gautam Hari Singhania, has requested seventy-five percent of the company's assets. Earlier this month, the couple made their breakup public.

The millionaire entrepreneur Gautam Singhania's wife, Nawaz Modi, has accused her husband of physical abuse. Modi said that Singhania had physically assaulted him and his little daughter Niharika in an exclusive interview with India Today.

The report states that when Singhania was asked to respond to questions about these accusations, he refused. In response to the email, he reportedly said, "I would like to maintain the dignity of my family as well as will refrain from making any remarks in the interest of my two beautiful daughters," according to media sources. Please don't invade my personal space."

Following their divorce, Modi, 53, allegedly asked for a share of Singhania's purported $1.4 billion net worth for himself and his two daughters, Niharika and Nisa, as part of the family settlement.

Though he is said to have largely consented to this requirement, Singhania has advocated setting up a family trust and moving the family assets into it, in which he would serve as the only managing trustee. Nawaz Modi apparently finds these circumstances intolerable.

Promoters owned 49.11 percent of Raymond as on September 30. Nawaz is a non-executive director at Raymond right now. Gautam, however, holds the positions of Managing Director and Chairman.

trends in stock prices

Over the last year, the stock has outperformed benchmark indexes. It has risen by 16 percent over the last year, while the Nifty has gained by 7 percent. In contrast, the stock has lagged the benchmark in 2023 YTD, increasing 3.6% as opposed to the Nifty's 11% gain.

This year has been very unpredictable, with positive returns in five of the eleven months so far and negative returns in the last six. After falling over 24 percent in September, it plummeted more than 13 percent in November, increasing the gap for the third straight month. It saw the largest fall in February—a 16.6 percent decline—and the largest increase—a 30.3 percent increase—in April.

At ₹1,542.55, the stock is now 31% behind its all-time high of ₹2,240.00, which was reached on September 9, 2023. Since March 28, 2023, when it reached its 52-week low of ₹1,092.60, it has increased in value by 41%.

On the other hand, it has produced multibagger returns over the previous three years, increasing by 458 percent over this time.

Revenue 

Raymond announced a little increase in net profit for the September quarter, coming in at ₹159.78 crore as opposed to ₹158.86 crore in the previous year. Even though the increase in profits was small, it coincided with a postponement of the holiday and wedding seasons, which typically boost sales for businesses.

According to Gautam Hari Singhania, "We at Raymond are optimistic that demand from consumers will pick up and the overall sentiments should stay positive with the onset of the festive as well as wedding season."

Operational revenue rose 4% year over year to ₹2,253.4 crore from ₹2,168.2 crore during the same time the previous quarter. Earnings before interest, taxes, depreciation, and amortization, or EBITDA, increased by 7% to ₹382 crore for the firm from ₹358 crore the previous year.

Raymond has shown its growing momentum by consistent quarter-over-quarter success. The firm reported that Q2FY24 was the ninth consecutive quarter in which sales and EBITDA recorded their highest-ever levels.

Is it now appropriate to "buy" the stock? Let's examine this:

original concept

ICICI Securities

Raymond was covered by the brokerage with a 'hold' call and a target price of ₹1,860, implying a gain of more than 20%. The firm identified the following as the stock's main risks: growing competition from new companies, a demanding demand environment, and rising input prices.

The sluggish selling of Raymond's FMCG company, the potential de-merger of the lifestyle division to simplify the group structure, and the acquisition-driven reduction of the engineering division in the developing aerospace, military, and electric vehicle (EV) sectors were all mentioned in a note from ICICI Securities. to multiply by two. MPPL increased the share price.

Jefferies

With a target price of ₹2,600, the global brokerage firm has assigned a 'buy' recommendation to the company, implying a significant upside of more than 64%. It said that Raymond had allayed investors' worries over the loan. Raymond already has net cash, according to the brokerage, and is prepared to offer its real estate and leisure companies independently.

Raymond is expected to have robust profits growth, which might lead to an increase in re-rating, particularly after the lifestyle sector merger. Over the last three years, Raymond's performance has significantly improved, especially in terms of profitability and the soundness of the balance sheet. Gains in market share and category expansion are driving growth in all industries. For Raymond's fiscal 2023–2026, we anticipate revenue growth of 13% CAGR and profits growth of 24% CAGR, according to Jefferies.

Motilal Oswal

With a target price of ₹2,600, the firm has assigned a 'Buy' recommendation to the company, suggesting an upside of more than 64%. It said that the company's main drivers are the promoter's capital investment and the de-merger. Raymond's real estate company also contributes to the expansion. During FY 2023–2027, Motilal Oswal projects sales to rise at an 11 percent compound annual growth rate (CAGR) and EBITDA to expand at a 12 percent CAGR.

In the past, Raymond's poor balance sheet has been the major source of worry since it has limited its capacity for expansion.

Amazing Equities

Raymond saw the start of InCred Equities' coverage, with a ₹2,200 target and a 42% upside. According to the brokerage, Raymond's restructuring activities are headed in the right path, and the company's recent leadership changes, emphasis on cutting inefficiencies, and improved business health have put it in a strong growth position.

Raymond will be divided into two distinct net-listed entities as a result of the restructuring. The current entity, which consists of real estate, engineering, and a denim (joint venture) division, will be split into two segments. The lifestyle business, which includes textile, apparel, and apparel segments, will be placed under RCCL after the demerger.

technological context

Technical Analyst Rohan Shah of Religare Broking Limited: Raymond has dropped more than 30% after reaching the 2240 lifeline due to intense selling pressure. In the process, the stock has fallen below its 200-day moving average (DEMA), which has historically functioned as a reliable support and is also in line with its prior resistance zone. In the future, a break below 1500 will increase selling pressure and drive the stock down to the 1420 region. The 1600–1620 region is anticipated to provide significant resistance in the foreseeable future, although only at higher elevations.

SVP of Technical and Derivatives Research at Axis Securities, Rajesh Palviya

"The stock has been under pressure for the last three months due to a sequence of lower top and lower bottom formations. This suggests that the short trend has changed or reversed to the negative. The stock has just closed on a closing basis and strongly broken its 200-day SMA (1657), suggesting that the downtrend is positive. The fact that the stock is still below its 20, 50, and 100-day SMA supports the negative outlook. 

A decline in strength over the short- to medium-term time horizon is indicated by the negative zone in which the daily, weekly, and monthly RSI strength indicator is now located. The short- to medium-term prognosis is very bleak, and a drop to levels between 1400 and 1200 is still possible. As a result, we advise against taking on fresh long positions at these prices. However, any brief relief rebound into the 1650–1800 range would still provide a trading opportunity for sellers, according to Palvia.

Director of InCred Equities Gaurav Bissa

Raymond was believed to be having difficulty during the last two weeks, after a robust surge. The daily chart has formed lower highs and lower lows as a result, indicating a reversal of the short-term positive trend. Additionally, the daily chart has shown a breakdown from a rising trendline pattern, which might lead to further selling and a decline in the stock. Raymond is developing a three black crow pattern on the weekly charts, which can drive the stock up to 1400 levels. Given that the 89 EMA and the Ichimoku Kumo support are located around that level, this is anticipated to be a significant support area, according to Bissa.