Raymond: Turning around - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Raymond: Turning around

Oct 29, 2001

Raymond Limited, the textiles and denim major, is clearly on the turnaround path. The company has registered a net profit of Rs 411 m for the second quarter ended September 30, 2001 as against a loss of Rs 1,500 m in 2QFY01. The notable aspect is the sharp rise in operating margins.

(Rs m)2QFY012QFY02Change1HFY011HFY02Change
Sales 3,393 2,655 -21.8% 6,661 3,976 -40.3%
Other Income 51 66 28.4% 78 90 15.3%
Expenditure 2,690 1,990 -26.0% 5,802 3,190 -45.0%
Operating Profit (EBDIT) 703 665 -5.4% 859 786 -8.5%
Operating Profit Margin (%)20.7%25.1% 12.9%19.8% 
Interest 285 42 -85.4% 556 90 -83.8%
Depreciation 210 130 -38.0% 483 258 -46.5%
Profit before Tax 259 559 115.6% (102) 528  
Extraordinary item (1,760) -   (1,760) (15)-99.1%
Tax - 148   - 148  
Profit after Tax/(Loss) (1,500) 411   (1,862) 365  
Net profit margin (%)-44.2%15.5% -28.0%9.2% 
No. of Shares (eoy) (m) 75.1 61.4   75.1 61.4  
Diluted number of shares 61.4 61.4   61.4 61.4  
Earnings per share (Rs)* - 26.8   - 11.9  
(*annualised)      

In the corresponding quarter of the previous year, Raymond recorded a loss primarily on account of loss on sale of steel division, which the company sold to EBG India for a consideration of around Rs 3,870 m. Though sales have fallen by 21.8% to Rs 2,655 m in 2QFY02, the results are not comparable as the company had both the cement and steel plant contributing to turnover last year. The rise in margins is in line with our estimates. Raymond is expected to save around Rs 1.3 bn as operating expenses from sale of its cement and steel divisions. The other major factor that could have resulted in improving margins is the recovery in denim prices. Denim prices, on an average, had gone up by 5%-7% in 1QFY02.

The Board of Directors of the company also approved a proposal to acquire the entire shareholding of Regency Textiles Portugesa Limitada, a company incorporated in Portugal. It is engaged in manufacturing and marketing of readymade garments. The consideration for the proposed acquisition is US$ 3 million (Rs 144 m). The company has been scouting for acquisitions both in the domestic as well as in the international markets for sometime in an attempt to provide an impetus to sales. The garments division currently contributes to a meager portion of sales for the company and acquisitions are necessary in the long run. But it remains to be seen how well the new acquisition pays off.

Interest and depreciation charges are also down sharply as the company had retired close to debts worth Rs 2.2 bn in 1QFY02 itself. For 1HFY02, net profit of the company stood at Rs 365 m as compared to a loss of Rs 1,862 in the corresponding quarter of the previous year.

The scrip is currently trading at Rs 75 on a P/E multiple of 6.3x the annualised 1HFY02 earnings. We expect the company to report around Rs 650 m to Rs 700 m as net profit for FY02.

Equitymaster requests your view! Post a comment on "Raymond: Turning around". Click here!

  

More Views on News

RAYMOND 2020-21 Annual Report Analysis (Annual Result Update)

Oct 20, 2021 | Updated on Oct 20, 2021

Here's an analysis of the annual report of RAYMOND for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of RAYMOND. Also includes updates on the valuation of RAYMOND.

Raymond Shares Gain 5% on this Unexpected Move (Views On News)

Sep 28, 2021

Raymond to rejig business to create value for shareholders.

RAYMOND 2019-20 Annual Report Analysis (Annual Result Update)

Dec 10, 2020 | Updated on Dec 10, 2020

Here's an analysis of the annual report of RAYMOND for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of RAYMOND. Also includes updates on the valuation of RAYMOND.

7 Indian Companies that Swear by Buffett's No-Split Rule (Views On News)

Sep 28, 2021

Just like Warren Buffett's Berkshire Hathaway, these Indian companies have not split their shares.

Top Performing Penny Stocks of 2021 (Views On News)

Aug 28, 2021

Several penny stocks have delivered multi-fold returns in a short span of time. Here are a few of them.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

RAYMOND SHARE PRICE


Dec 2, 2021 12:26 PM

TRACK RAYMOND

  • Track your investment in RAYMOND with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

COMPARE RAYMOND WITH

MARKET STATS