Raymond shares skyrocket 19% after real estate business demerger approval
Raymond Ltd, a textile and real estate conglomerate, saw its shares surge by 18.5% to a record high on July 5. This significant increase came after the board approved the demerger of its real estate business, Raymond Realty. At 11:30 am, the shares were trading at ₹3,448 on the National Stock Exchange (NSE), just shy of their record high of ₹3,484.
Demerger plan to consolidate Raymond's real estate business
The demerger plan aims to consolidate Raymond's entire real estate business into a single entity. This strategic move is designed to leverage growth opportunities and attract new investors and strategic partners. "To exploit the growth potential of the real estate business and attract a fresh set of investors/strategic partners... it is proposed to consolidate the entire real estate business of the Group under one single entity," Raymond stated in a regulatory filing.
Raymond Realty to issue shares as part of demerger plan
As part of the demerger, Raymond will issue 6.65 crore shares of Raymond Realty with a face value of ₹10 per share. Existing shareholders will receive one share of Raymond Realty for each share they hold in Raymond, with no cash or alternative considerations involved. Upon completion, Raymond Realty will be listed on both the NSE and BSE as a separate entity.
Raymond's real estate business achieves significant scale
Raymond's real estate business has reported significant growth, with revenue of ₹1,593 crore (43% year-on-year growth) and EBITDA of ₹370 crore in FY24. "This strategic move comes as Raymond's Real Estate Business has achieved scale... positioning it well to chart its own growth path as a separate entity," the company stated. Raymond Realty owns around 100 acres of land in Thane with an approved carpet area of 11.4 million sq ft, currently under development on about 40 acres.
Raymond Realty's ongoing projects and future potential
Raymond Realty is currently developing five projects worth ₹9,000 crore on its Thane land. The company also has the potential to generate more than ₹16,000 crore from this land bank, making a total potential revenue of over ₹25,000 crore. Last year, Raymond had demerged its lifestyle business to Raymond Consumer Care in an effort to become debt-free.
Demerger aligns with Raymond's growth strategy
Gautam Singhania, Chairman and Managing Director of Raymond Limited, commented on the development, stating that the demerger aligns with the company's growth strategy. "Having stated that now we have clear three vectors of growth at Raymond group i.e. Lifestyle, Real Estate and Engineering... this corporate action is in line with creating shareholder value creation," said Singhania. The company also noted that the demerger will enable independent capital allocation and balance sheet management based on each business' distinct needs.
