Fw: (Erratum) Investor's Eye: Pulse - Monetary policy review; Update - Raymond; MF - Top equity mutual fund picks

 

 

Investor's Eye [June 16, 2011] Please see the attachment for details Sharekhan www.sharekhan.com

In the Viewpoint report on Raymond on the page 4 of the Investor's Eye dated June 16, 2011, the chart titled "Branded vs Un-branded" erroneously shows the contribution of branded sales as 32% and that of unbranded sales as 68% in the company's revenue mix. The correct revenue mix is as follows: branded sales 68% and unbranded sales 32%. The error is regretted and has been rectified. Summary of Content PULSE TRACK Monetary policy review: RBI maintains hawkish stance, raises policy rates by 25 basis points VIEWPOINT Raymond Well placed to capitalise on domestic consumption play Strong brand, with dominant market share: Raymond is the oldest textile brand in India with a history spanning more than 85 years. Over the years through its quality focus approach and unique brand building initiatives (it has spent over Rs900 crore over the last ten years FY2002-11 over advertising the brand) the brand 'Raymond' has gained a unique mind share and brand recall amongst consumers. The testimony to the same is its market leadership status in the worsted fabric segment. Apart from the fabric segment, the brand Raymond also has its presence in the ready-to-wear (the apparel) segment. Besides the Raymond brand, the company possesses a bouquet of apparel brands (viz Park Avenue, Parx and ColorPlus) to name a few) that enjoy a leadership status in their respective categories. Robust distribution network, gaining strength day by day: Strong distribution is a key prerequisite for any consumer-led model and Raymond has created strong entry barriers for competitors in this regard. It has an enviable distribution set-up that is a blend of wholesalers, distributors, MBO touch points, exclusive brand outlets (EBO) and its own famous store brand, The Raymond Shop (TRS). The brand is present in more than 400 towns including class 1 to class 5 towns and cities, is retailed through an array of 1,600 MBOs and is present at over 18,000 touch points including the exclusive Raymond brands available in 739 own retail (590 TRS) stores and 149 exclusive brand stores. Since Raymond enjoys strong brand equity and recall, it has franchisees operating even out of tier-3, tier-4 and tier-5 cities.  Valuation and outlook: In FY2011, Raymond saw tremendous improvement in its financials with a strong top line growth of 22.3%. Further a strong turnaround in the business would lead to almost a three-fold increase in its profitability too. A branded play with a strong distribution franchisee, enhanced focus and operational earnings visibility, Raymond is trading at 10.4x our rough FY2013E earnings per share (EPS) of Rs37.1. This is attractive compared with the valuation of the other branded retail plays. Further, any development with regard to the Thane land (company possesses ~120 acres of land at the heart of Thane at Pokhran Road) in the form of either a joint development or a disposal would lead to value unlocking and provide significant cash to the company. On the wake of Raymond's penetration lead consumption play coupled with its strong brand equity and enchanced focus we are positive on the company. However, we do not have active rating and coverage on the stock. MUTUAL GAINS Sharekhan's top equity mutual fund picks Large-cap funds Mid-cap funds Multi-cap funds ICICI Prudential Focused Bluechip Equity IDFC Small & Midcap Equity ICICI Prudential Discovery Franklin India Bluechip HDFC Mid-Cap Opportunities Birla Sun Life Dividend Yield Plus Birla Sun Life Frontline Equity - Plan A DSP BlackRock Small and Midcap HDFC Equity Principal Large Cap IDFC Premier Equity Fund - Plan A Reliance Equity Opportunities Reliance Quant Plus Sundaram Select Midcap Mirae Asset India Opportunities Tax saving funds Thematic funds Balanced funds HDFC Taxsaver DSP BlackRock Natural Resources & New Energy HDFC Prudence Religare Tax Plan Birla Sun Life India GenNext HDFC Balanced Fidelity Tax Advantage UTI India Lifestyle Reliance RSF - Balanced ICICI Prudential Taxplan Fidelity India Special Situations Birla Sun Life 95 HDFC Long Term  Advantage HDFC Infrastructure Tata Balanced Fund Fund focus Principal Large Cap Fund IDFC Premier Equity Fund - Plan A Click here to read report: Investor's Eye

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