Valuation and view:
Reiterate BUY with unchanged TP of INR3,000
While RLL benefits from strong brand affinity, its valuation has been impeded by sluggish execution in the past (volatility in PAT growth over FY10-20).
However, RLL’s renewed focus on growth, along with working capital discipline, could lead to a valuation re-rating over the medium term.
A growth recovery in the branded apparel segment, the scale-up of newer categories like sleepwear and innerwear, and the successful execution in Ethnix by Raymond are the key growth drivers, in our view.
We build in a CAGR of 9-11% in revenue/EBITDA/PAT over FY24-27. We value RLL at a PE multiple of 30x on Dec’26E, resulting in a TP of INR3,000 per share.
Reiterate our BUY rating on RLL.
