Shares of Raymond rallied over 18% to touch a fresh record high on Friday, in an otherwise weak broader market, after the fabric and fashion retailer announced the demerger of its real estate business into a separate entity. The company, led by chairman and managing director Gautam Singhania, has proposed to split off its real estate business into its wholly owned subsidiary, Raymond Realty Limited (RRL).

Cheering the news, Raymond shares opened higher at ₹3,035.95, up 3.2% against the previous closing price of ₹2,941.90 on the BSE, snapping a three sessions losing streak. In the last three trading days, the midcap stock rose as much as 18.3% to hit a fresh record high of ₹3,480.35 in intraday trade. The counter witnessed strong volume as more than 2 lakh shares changed hands over the counter compared to two-week average of 0.44 lakh stocks, while its market capitalisation climbed to ₹22,809 crore.

Raymond shares have witnessed a strong rally in the calendar year 2024, with the stock price surging 97% during this period. The counter has risen 130% against its 52-week low of ₹1,487 touched on December 1, 2023. In the last one year, the stock climbed 96%, while it zoomed 97% in six months and 58% in a month.

In an exchange filing last evening, Raymond announced the vertical demerger of its real estate business, which will operate as a separate listed entity, Raymond Realty Limited (RRL), within the Raymond Group post all statutory approvals. “The new entity will seek automatic listing on stock exchanges and according to the scheme of arrangement, each Raymond Ltd (RL) shareholder will receive 1 share of RRL for every 1 share held in Raymond Limited,” it said in the regulatory filing.

As per the company, the strategic decision was taken after real estate arm achieved scale, reporting revenue of ₹1,593 crore (43% YoY growth) and EBITDA of ₹370 crore in FY24, positioning it well to chart its own growth path as a separate entity.

Raymond Realty has around 100 acres of land in Thane with 11.4 mn sq ft RERA approved carpet area of which about 40 acres is currently under development. There are five ongoing projects worth ₹9,000 crore on its Thane land, with an additional potential to generate more than ₹16,000 crore, making a total potential revenue of over ₹25,000 crore from this land bank. Leveraging an asset-light model, Raymond Realty recently launched its first JDA project in Bandra, Mumbai. Additionally, Raymond has signed three new JDAs in Mahim, Sion, and one more in Bandra East Mumbai, taking the combined revenue potential from four JDA projects in the Mumbai Metropolitan Region to over ₹7,000 crore. The development of Thane Land Bank and current 4 JDA’s, gives the company a potential revenue of ₹32,000 crore.

In the last one year, Raymond shares have witnessed a strong rally after the company made several changes in the organisation structure, and took some cost optimisation measures. The rapid scale-up of the real estate business, sale of the FMCG business, and doubling the size of engineering business by a foray into sunrise sectors of aerospace, defense, and EV through the acquisition of MPPL also created a clear growth path for the company.

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