Raymond shares hit 5% upper circuit after stock trades ex-date for demerger of lifestyle business

Shares of Raymond Ltd hit the 5% upper circuit limit at ₹2,001.3 apiece on the NSE on Thursday, July 11, as the stock traded ex-date for demerger of the company’s lifestyle business.

Raymond Ltd shares plunged 40% in early trade to an intra-day low of ₹1,810.7 apiece on the NSE. The decline was witnessed after the completion of the first phase of the demerger of its lifestyle venture, Raymond Lifestyle Ltd (RLL).

The demerged lifestyle vertical is expected to be listed separately on the stock exchanges by the end of August or early September 2024, according to reports. The company informed the exchanges in a filing on July 10 that the existing investors of Raymond Ltd (RL) will receive four fully paid-up shares of Raymond Lifestyle (RLL) with a face value of ₹2 each for every five fully paid-up equity shares of ₹10 each held by them, as per the provisions of the demerger scheme. The share swap will be conducted in a 4:5 ratio and the record date for the swap is today, July 11.

Earlier on July 4, Raymond informed the exchanges about its plan to demerge its real estate business into a wholly owned subsidiary called Raymond Realty Limited (RRL). After the completion of the demerger process, Raymond Ltd and Raymond Realty Limited (RRL) will operate as separate listed entities.

As per the scheme of arrangements, the existing investors of Raymond will get one share of Raymond Realty Limited (RRL) for every share held of Raymond Limited (RL). The demerger of the real estate business could happen in a span of 15-18 months, according to reports.

Raymond mentioned in its July 4 release that the demerger of its real estate vertical is taking place as the business has achieved scale and posted a revenue of ₹1,593 crore, increasing by 43% on a year-on-year basis. Its EBITDA stood at ₹370 crore in FY24. Raymond Realty has 100 acres of land in Thane with an 11.4 million sq. ft. Real Estate Regulatory Authority (RERA) approved carpet area, of which nearly 40 acres are currently under development.

After the completion of the two demergers, Raymond Ltd will be left with the company’s engineering business, and Raymond Lifestyle Ltd (RLL) and Raymond Realty Ltd will be listed on the exchanges as separate entities. All three businesses of the Raymond Group are likely to be net debt-free after listing and its lifestyle business and real estate business will have net cash of ₹200 crore and ₹500 crore, respectively.