- Revenue: INR998 crores in Q1 FY25, 93% YoY growth from INR517 crores.
- EBITDA: INR162 crores in Q1 FY25, 82% YoY growth from INR89 crores.
- EBITDA Margin: 16.2% in Q1 FY25.
- Profit After Tax (Continuing Operations): INR57 crores, 27% increase from INR45 crores.
- Profit from Discontinued Operations: INR7,310 crores due to the demerger of the lifestyle business.
- Real Estate Revenue: INR488 crores in Q1 FY25, 108% YoY growth from INR235 crores.
- Real Estate EBITDA Margin: 17.5% in Q1 FY25.
- Engineering Business Revenue: INR419 crores in Q1 FY25, doubling from INR209 crores.
- Engineering Business EBITDA Margin: 13.2% in Q1 FY25.
- Net Cash Surplus: INR618 crores, increased by INR117 crores from March '24.
- Gross Debt: INR870 crores.
- Cash and Cash Equivalents: INR1,488 crores as of June 30, 2024.
- Interest Cost: INR31 crores, up from INR7.7 crores in the same quarter last year.
- Lifestyle Business Revenue: INR1,249 crores, 8% decrease from INR1,353 crores.
- Lifestyle Business EBITDA: INR87 crores, down from INR180 crores.
- Branded Textiles Revenue: INR565 crores, 18% decrease from INR688 crores.
- Branded Textiles EBITDA Margin: 10% in Q1 FY25.
- Branded Apparel Revenue: INR303 crores, stable compared to INR304 crores.
- Branded Apparel EBITDA Margin: 4.8% in Q1 FY25.
- New Stores Opened: 21 new stores, total 1,539 stores as of June 30, 2024.
- Garmenting Segment Revenue: INR252 crores, 5% increase from INR239 crores.
- Garmenting Segment EBITDA Margin: 3.5% in Q1 FY25.
- High-Value Cotton Shirting Revenue: INR186 crores, 3% decrease from INR192 crores.
- High-Value Cotton Shirting EBITDA Margin: 5.5% in Q1 FY25.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Raymond Ltd (BOM:500330, Financial) reported a strong quarterly performance in real estate and engineering business, with a revenue growth of 93% year-on-year.
- The company achieved a significant booking of INR611 crores in Q1 FY25, driven by high demand for its real estate projects in Thane and Bandra.
- Raymond Ltd completed the acquisition of Maini Precision Products Limited, enhancing its presence in the aerospace, defense, and EV components sectors.
- The company maintained a net cash surplus of INR618 crores, reflecting a strong financial position.
- Raymond Ltd's real estate business is leveraging an asset-light model and has a potential revenue of over INR32,000 crores from its land bank and JDA projects.
Negative Points
- The lifestyle business witnessed weaker revenue due to discretionary spending pressures, prolonged heatwaves, and negligible wedding dates, resulting in an 8% decline in revenue.
- The EBITDA margin for the lifestyle business declined significantly, with branded textiles and apparel segments experiencing lower margins due to scale deleverage and higher marketing costs.
- Engineering consumables segment faced challenges due to sluggish demand in both domestic and export markets, impacting overall performance.
- The interest cost incurred during the quarter increased to INR31 crores, primarily due to debt taken for the acquisition of MPPL and existing working capital debt.
- The branded textiles segment saw an 18% decline in revenue, attributed to fewer wedding dates and weak market demand, leading to a lower EBITDA margin of 10%.
Q & A Highlights
Q: Congrats for a good set of numbers. Just two questions. One is on basically the engineering consumables and the lifestyle business. So can you tell me what are the reasons behind this weak environment in terms of demand for these segments?
A: (Amit Agarwal, Group CFO) Yes. So I'll ask Sunil for Lifestyle to respond. And after he finishes, we'll ask Gautam Maini, who is also there, who is the Managing Director of Engineering business to respond. Sunil?
Sunil Kataria, CEO of Lifestyle Business: The weak environment in the lifestyle business is primarily due to three factors: negligible weddings in the April-May season, extraordinary heatwaves impacting consumer footfall, and prolonged elections affecting cash flows and movement.
Gautam Maini, CEO of Engineering Business: Similar factors like heatwaves, inflation, and elections impacted the engineering consumables segment. Additionally, increased logistics costs and container availability issues affected export sales.
Q: And what is the outlook for the rest of the year for this segment?
A: (Sunil Kataria, CEO of Lifestyle Business) The second half of the year looks promising with a large number of wedding dates and the festive season. We expect a gradual recovery in this quarter and momentum picking up in the second half. The geopolitical situation in Bangladesh could also positively impact our garmenting business.
Q: On the real estate business, can you explain the margin differences between the Bandra JDA project and the Thane project?
A: (Harmohan Sahni, CEO of Realty Business) The marketing expenses were higher this quarter due to launches and promotions. Thane has lower land costs, leading to higher margins. Bandra's initial pricing is lower, but margins will improve as the project progresses. We expect to achieve an average margin of around 23% for the full year.
Q: What is the timeline for launching the Sion, Mahim, and new Bandra projects?
A: (Harmohan Sahni, CEO of Realty Business) A fair assumption would be to look at H1 of next year for the launch of all these projects. One project might launch by March, but it won't significantly contribute this year.
Q: On the branded textile segment, the margin has declined significantly. Is this due to the decline in sales?
A: (Sunil Kataria, CEO of Lifestyle Business) The primary reason for the margin decline is scale deleverage. There is also a marginal impact due to a change in product mix related to the wedding season. We expect margins to recover as business scales up from Q2 onwards.
Q: On the garmenting segment, despite revenue growth, margins have declined sharply. What are the reasons?
A: (Sameer Shah, CFO of Lifestyle Business) The decline is due to higher employee costs as we ramp up capacity and an adverse mix impact. However, we expect margins to recover and be close to last year's levels.
Q: Can you share the growth outlook and order book for Maini Precision Products Limited (MPPL)?
A: (Gautam Maini, CEO of Engineering Business) We expect mid- to late-teens growth, driven by aerospace and EV markets. We have long-term contracts ranging from 3 to 10 years, providing a clear view of future growth.
Q: What was the quantum of marketing expenses for this quarter, which impacted overall margins?
A: (Harmohan Sahni, CEO of Realty Business) The marketing expenses were approximately INR20 crores to INR22 crores.
Q: On the lifestyle business, despite a weak first quarter, do we still maintain our target for footprint expansion?
A: (Sunil Kataria, CEO of Lifestyle Business) Yes, we are continuing with our plan to add 200-plus stores this year, focusing on expanding our reach across multiple formats.
Q: What is the current inventory situation in the lifestyle business?
A: (Sunil Kataria, CEO of Lifestyle Business) Our secondaries have been higher than primaries, and we do not see any concern with channel inventory buildup. We have tight controls on inventory across all points.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
