Raymond
Raymond Ltd. shares opened at ₹1,906.00 on the NSE today, dropping 39.60% from the previous day’s closing price of ₹3,156.10. This significant drop is due to the company’s demerger of its lifestyle business, which will now be listed separately around August-September.
Listing Performance
| Exchange | Previous Day’s Closing Price (₹) | Today’s Opening Price (₹) | Drop (%) |
|---|---|---|---|
| NSE | 3,156.10 | 1,906 | 39.60 |
Market Reaction
As the session progressed, the stock recovered slightly and was trading at ₹2,009.80, up 3.07% from the opening price. Analysts at MOFSL had previously estimated Raymond’s post-demerger share value at ₹1,415 per share, which includes ₹1,200 per share for the real estate segment and ₹215 for the engineering segment. They also suggested that the lifestyle business might be listed at around ₹2,930 per share.
InCred Equities had a different estimation. They valued the lifestyle business at ₹1,982, the real estate business at ₹1,086, and the engineering business at ₹499 per share.
Future Plans
Raymond’s demerger of the lifestyle business is just the beginning. The company also plans to demerge its real estate business, which will take 15-18 months. Eventually, Raymond will focus solely on its engineering business.
Share Distribution
Current shareholders will receive four shares of Raymond Lifestyle for every five shares of Raymond they hold. The same goes for the real estate business with a 1:1 share exchange ratio.
Purpose of Demerger
“This is to create three distinct businesses for better value unlocking,” explained Arihant Capital Markets. The real estate segment is particularly promising. Out of 100 acres of land in Thane, 40 acres are being developed with a revenue potential of ₹9,000 crore. The remaining 60 acres could generate ₹16,000 crore in the next eight years.
Real Estate Business Details
- Current JDAs: ₹7,000 crore revenue potential in 4-5 years
- Cash on Books: ₹500 crore
- Annual Revenue Potential: ₹4,000 crore in 3 years
- EBITDA Margin: 25%
Engineering Business Outlook
Raymond’s engineering segment has great potential due to its acquisition of MPPL, which could unlock significant value in aerospace and defense. In FY24, this business generated ₹300 crore in revenue with a 25% margin, compared to Raymond Engineering’s mid-to-low teen margins.
Engineering Business Performance
- Subsidiaries: Raymond Engineering and MPPL
- Future Revenue Growth: Double in 3-4 years for MPPL, and in 5 years for Raymond Engineering
- Major Clients: HAL, Boeing, Airbus, Comac
Conclusion
The demerger is a strategic move to create three focused companies in lifestyle, real estate, and engineering. While the immediate drop in stock value might concern some investors, the long-term potential remains strong.
Disclaimer
Welkinnews provides stock market news for informational purposes only. This is not investment advice. Always consult with a financial advisor before making investment decisions.
