“Raymond shares’ daily activity”
- Decline in Raymond Limited’s Stock: Raymond stock dropped by around 40% due to the divestment of its lifestyle business.
- Raymond Split News: The latest news on Raymond’s split indicates a strategic move to unlock value by creating three separate entities.
- Raymond Lifestyle Listing: The listing of Raymond Lifestyle is expected by August-September, which will open up new investment opportunities.
- Reasons for Raymond Shares Decline: The primary reason for the drop in Raymond shares is the market’s adjustment to the divestment of the lifestyle segment.
- Raymond Real Estate Business: Raymond’s real estate business is poised for growth, with significant earning potential from its Thane project.
- Raymond Engineering Business: Raymond’s engineering business is set to profit from high-growth sectors such as aerospace and defense.
- Raymond IPO Analysis: A detailed analysis of the Raymond IPO reflects the company’s strategy to enhance shareholder value through the split.
- Investment Opportunity in Raymond Stock: Recent developments offer an investment opportunity in Raymond stock, especially post-split.
- Raymond Financial Analysis 2024: Raymond Financial Analysis 2024 highlights strong performance and future prospects across its diverse business units.
- Raymond’s Market Potential: Raymond’s market potential is significant, with growth opportunities in lifestyle, real estate, and engineering sectors.
“Why is Raymond in the news?”
Raymond Limited’s shares saw a dramatic 40% decline on Thursday as the stock went ex-dividend for the demerger of its lifestyle business. The company opened at ₹1,906 on the NSE, significantly lower than the previous day’s closing of ₹3,156.10. The demerger is part of a major strategic plan to unlock value by creating three independent, pure-play entities focused on lifestyle, real estate, and engineering businesses. Existing Raymond investors will receive shares in the newly listed Raymond Lifestyle, making this restructuring significant for the company’s future growth and market position.
Analysis of Raymond Limited’s Fundamentals
Corporate Actions and Valuation Impact The sharp decline in Raymond’s share price can be attributed to the divestment of its lifestyle business. After the split, the company’s stock is now trading without factoring in the lifestyle segment’s valuation. Analysts at MOFSL estimate Raymond Ltd.’s post-split per-share value at ₹1,415, including ₹1,200 for the real estate business and ₹215 for the engineering business. Raymond Lifestyle may be listed at approximately ₹2,930 per share.
Segmentation of Business Divisions
Lifestyle Business
- Listing and Valuation: The lifestyle division, Raymond Lifestyle (RLL), is expected to be independently listed by August-September. MOFSL values this segment at ₹2,930 per share post-split.
- Growth Potential: The lifestyle business is set to expand significantly with new product lines and exclusive brand outlets (EBOs). New products include a sleepwear brand and innerwear category, which are expected to drive revenue growth.
Raymond’s Real Estate Business:
- Valuation and Outlook: InCred Equities values the real estate business at ₹1,086 per share. The development of 40 acres in Thane is expected to generate ₹9,000 crore, with an additional 60-acre development projected to bring in ₹16,000 crore over eight years
- .Future Plans: Raymond Realty will continue developing projects through an asset-light model, focusing on joint development agreements (JDAs) to ensure strong free cash flow. The business aims to reach an annual run rate of ₹4,000 crore over the next three years with a stable EBITDA margin of 25%.
Engineering Business
- Valuation and Expansion: The engineering division is valued at ₹499 per share by InCred Equities. This business includes Raymond Engineering and Maini Precision Products Ltd. (MPPL). The acquisition of MPPL has opened significant opportunities in the aerospace and defense sectors.
- Growth Strategy: The ‘Make in India’ initiative and increasing demand from major aerospace companies like Boeing and Airbus are expected to double revenue from the engineering business in 3-4 years.
Raymond’s Financial Health and Strategic Direction
- Sum of Parts Valuation: According to Motilal Oswal, the combined value of the three businesses (lifestyle, real estate, and engineering) is ₹3,755 per share. Antique Stock Broking and InCred Equities have set target prices of ₹3,905 and ₹3,650, respectively.
- Cash Flow and Debt: Raymond’s real estate business is debt-free, with cash reserves of ₹500 crore. The engineering division has strong growth potential, focusing on high-margin aerospace and defense sectors.
- Management and Governance: Under the leadership of Gautam Singhania, Raymond is transitioning to a focused business model with independent entities for each division. This strategic move aims to unlock significant shareholder value.
Investment Opportunities The recent decline in Raymond’s share price presents a potential buying opportunity. Analysts believe the stock is undervalued post-split, with a fair value estimated to be higher than the current trading price. MOFSL’s ‘Buy’ rating and positive outlook from Antique Stock Broking and InCred Equities support this sentiment.
Conclusion
Raymond Limited’s strategic divestment of its lifestyle business marks a key milestone in its corporate restructuring journey. By creating three pure-play units, the company aims to unlock substantial shareholder value. With strong growth potential in each division, solid financial health, and a focused management approach, Raymond presents an attractive investment opportunity. Investors should consider the long-term prospects and current undervaluation of the stock post-split when making investment decisions.
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