Raymond in focus amid lifestyle unit spinoff; likely to list RRL in a month

Shares of Raymond will be in focus on Thursday’s trade as the spinoff of its lifestyle business takes effect. The Mumbai-based firm has set July 11 as the record date for the demerger. The hived-off unit Raymond Lifestyle (RLL) is expected to list within a month. 

Raymond has also proposed the merger of its real estate business Raymond Realty (RRL). Going ahead, the Raymond Group will have three separate listed entities RLL, RRL and Raymond, which will focus on engineering tools and hardware, auto components, aerospace and defense businesses.

“Our sum-of-the-parts-based model values the real estate business at FY26E EV/Ebitda of 8x on embedded Ebitda, assuming pre-sales of Rs 4,000 crore and 25 per cent Ebitda margin, and arrives at a valuation of Rs 8,000 crore (Rs 1,200 per share). We assign a P/E of 20x on FY26E to the lifestyle business, arriving at a value of Rs 2,340 per share (Rs 2,930 post demerger in RLL). The engineering business is valued at 8x FY26E EV/Ebitda, arriving at a value of Rs 250 per share. The combined value of the three businesses works out to be Rs 3,755 per share,” said a note by Motilal Oswal, which has a ‘buy’ rating on the stock.

Shares of Raymond on Wednesday closed at Rs 3,153, up Rs 2.4 per cent. Antique Stock Broking has set a target price of Rs 3,905 and a ‘buy’ rating.

“Raymond's real estate business is going strong with the Pokhran Road project already an established landmark project in Thane. With steady business development under the asset-light model, we believe Raymond Realty can continue with 25 per cent CAGR in sales booking with embedded Ebitda margin of over 30 per cent. The zero debt with net cash of Rs 500 crore is an icing,” said Antique in a note.