Raymond share price may hit ₹2,600, say analysts. Here's why

livemint.com:

Raymond share price surged over 13% to hit a 52-week high on Tuesday's trade after brokerages initiated 'buy' rating on the stock. Raymond stock price opened at intraday low of ₹2,090 apiece in BSE, and touched a intraday high at ₹2,240. According to technical analysts, Raymond share price witnessed a strong gap up opening and has witnessed follow up buying backed with strong volumes.

Considering the positive development they expect the upmove may continue in the near term, where the next resistance is in the zone of 2,330 -2,340 levels. The bullish gap left today around 2,070 - 2,100 to act as immediate support. In its report, global brokerage Jefferies stated that it was focused on both growth and simplification.

With a 28% potential increase from the market price of ₹2,023.90, the international brokerage has set a price target of ₹2,600. In its research, Jefferies noted that Raymond has eased prior investor concerns over debt and company structure through sustained measures. The business has already generated net cash, and in less than 12 million it plans to list its leisure and real estate operations independently.

Businesses are putting a strong emphasis on growth, as evidenced by, among other things, category expansion, market share gains, and premiumisation. The brokerage anticipates Raymond to expand revenues and earnings at a CAGR of 13% to 24% from FY23 to FY26E. "Over FY23-26E, we forecast Raymond to report 13% revenue CAGR, with modest margin expansion.

This should translate into 16% Ebitda CAGR. With net cash B/S, EPS growth should be at 24% and consol. ROCE should remain >15%, going forward.