Raymond shares Trades Ex-Lifestyle Biz; What’s Next For Investors?

Shares of Raymond showed a 40 per cent gap down opening on Thursday as the stock traded ex-demerger after the lifestyle business was spun-off from the company. The current traded value of Raymond Ltd. excludes the lifestyle business.

However, the scrip was up 4.5 per cent to Rs 2,037 on the BSE in Thursday’s intra-day trade in an otherwise weak market.

The demerged Lifestyle business of Raymond has been separated and would now be listed separately on stock exchanges by the end of August or early September 2024.

Existing investors of Raymond would be offered four shares of Raymond Lifestyle (RLL) for every five Raymond Ltd. shares (4:5 share swap ratio). Today is the record date for the demerger.

Raymond Ltd. has also proposed the merger of its real estate business Raymond Realty (RRL). Going forward, 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.

Upon completion of Raymond’s demerger of its real estate business, shareholders will get one Raymond Realty share for each Raymond share. The real estate business demerger could take 15-18 months period to complete. After completing the demerger process, the Raymond entity would comprise only the Engineering business.

Post demerger all businesses are expected to be net debt-free. The lifestyle business will have net cash of Rs 200 crore while real estate business is expected have a cash of Rs 500 crore.

Some analysts, reading the available charts, remain positive on the stock even after the demerger and see a strong upside possible in the stock in the coming session. They believe that the stock will continue to hog limelight at the street and is poised to deliver a strong return in the near term.

After a one-sided rally since many months, Raymond finally underwent a demerger. Although the charts are not adjusted, after the demerger the stock retested the zone of Rs 1800 from where the rally started, said Mehul Kothari, AVP Technical Research from Anand Rathi Shares & Stock Brokers.

“As of now the stock seems to be in a demand zone. Thus we advise traders to buy the stock in the range of Rs 2,000 – 1,960 with a stop loss of Rs 1,800 for upside target of Rs 2,400,” he added, suggesting an upside of nearly 20 per cent in the stock.

Domestic brokerage firm InCred Equities had estimated the fair value of lifestyle business at Rs 1,982, realty business at Rs 1,086 and engineering business at Rs 499 per share.

Motilal Oswal had estimated per share value of Raymond Ltd at Rs 1,415 per share post the corporate action, which included Rs 1,200 per share value of real estate and Rs 215 of the engineering business. The Lifestyle business could be listed at Rs 2,930 per share, the domestic brokerage suggested.

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