Raymond Ltd’s shares plummeted by 40% at the opening of the market on Thursday due to the demerger of the lifestyle business. The demerged business will now be listed separately on stock exchanges between August and September. Existing Raymond investors will receive four shares of Raymond Lifestyle for every five Raymond shares. Today marks the record date for this transaction. On Thursday, the stock opened at Rs 1,906 on NSE, a 39.60% decrease from the previous day’s closing value of Rs 3,156.10. However, the stock saw an increase in value as the session progressed, reaching Rs 2,009.80, up 3.07%. MOFSL estimated the post-corporate action value of Raymond Ltd at Rs 1,415 per share, with Rs 1,200 attributed to real estate and Rs 215 to the engineering business. In addition, the Lifestyle business could be listed at Rs 2,930 per share, as suggested by the domestic brokerage. InCred Equities estimated the fair value of the lifestyle business at Rs 1,982, realty business at Rs 1,086, and engineering business at Rs 499 per share.
The demerger of the lifestyle business is part of a larger plan, as Raymond also intends to demerge the real estate business, which could take 15-18 months to complete. After completing the demerger, the Raymond entity would consist of only the Engineering business. The share exchange ratio for the lifestyle listing is 4:5 (4 shares of RLL for every 5 of Raymond), and 1:1 for the real estate listing.
“This is to create three pure-play businesses for heightened value unlocking,” said Arihant Capital Markets. In the case of the real estate business, 40 out of 100 acres of legacy land in Thane is under development. The revenue potential from the 40 acres under development is Rs 9,000 crore, and the remaining area has a revenue potential of Rs 16,000 crore — a total of Rs 25,000 crore, which should accrue in about 8 years.