Raymond shares dip 7% after selling FMCG biz to Godrej Consumer Products

Shares of Raymond Ltd declined 7.3% on Friday, the most in four weeks, to close at ₹1,590 apiece on the BSE after the company announced that its FMCG business including in-house brands such as Park Avenue and KamaSutra would be acquired by Godrej Consumer Products Ltd in an all-cash deal of ₹2,825 crore.

During the session on Friday, the scrip opened at ₹1,710.00 as against the closing price of the previous session of ₹1,717.35 on Thursday. The counter closed at ₹1,590.80. In contrast to this, the S&P BSE Sensex rose 0.76% or 463 points higher at 61,112.

The company’s market capitalisation stood at ₹10,691.08 crore as 98,219 shares exchanged hands on the BSE, against the two-week average of 0.66 lakh shares. Shares of Raymond are trading 2.5% lower than the 52-week high of ₹1,755.35, whereas the company’s share price is trading 131.4% higher than the 52-week low of ₹738.95.

The cash deal is expected to be completed by May 10, 2023. The Singhania family-backed Raymond group had been looking to divest its consumer care business for over two years.

Raymond Consumer Care's FMCG (fast-moving consumer goods) business is being sold to GCPL, along with the trademarks of men’s grooming brand Park Avenue (for the FMCG category), deodorant KS, sexual wellness brand KamaSutra and Premium, through a slump sale.

Raymond is a leading player in the deodorants and sexual wellness categories. Atul Singh, group vice chairman, Raymond Group, said the company takes pride in building strong homegrown brands that are among the leaders in their categories. Raymond Consumer Care had reported sales worth ₹411 crore in FY21; ₹522 crore in FY22; and ₹622 crore in FY23.

Sudhir Sitapati, managing director and CEO, Godrej Consumer Product, said the company is excited to welcome the Raymond Consumer Care team and brands to Godrej Consumer Products. "This acquisition allows us to complement our business portfolio and growth strategy with under-penetrated categories that offer a long runway of growth."

Notably, the shares of Godrej Consumer Products declined as much as 5.9% to hit an intraday low of ₹896.85 apiece on the BSE. During the session, the scrip closed at ₹906.25. During the session, the company’s market capitalisation stood at ₹92,682.47 crore as 1,31,952 shares exchanged hands on the BSE as against the two-week average of 0.19 lakh shares.

Raymond Consumer Care is the FMCG entity of the 90+-year-old diversified conglomerate with leadership status in the Indian deodorant and condom market and a competitive presence in multiple other categories. Godrej Consumer Products is a part of the 125-year-young Godrej Group. It is expected to deliver double-digit volume and value growth in the March quarter on the back of steady performance by both home care and personal care businesses.