Raymond shares hit record high after textile company’s board announces spin-off of real estate arm

Actions of Raymond peaked on Friday, a day after the group announced the vertical split of his real estate company in its wholly owned subsidiary, Raymond Realty Ltd (RRL).

The board of directors of Raymond Limited announced on Thursday that Raymond Limited and Raymond Realty Limited (RRL) will operate as separate listed entities, according to a company statement.

Raymond shares jumped around 10 per cent to Rs 3,236 per share at the opening of trading this morning.

On the stock market front, the company said on Thursday that the new entity would seek an automatic listing on the stock exchange. Under the scheme of arrangement, each shareholder of Raymond Ltd (RL) will receive one share of RRL for each share held in Raymond Ltd.

The split of Raymond’s real estate arm is seen as a move to unlock the potential of the group’s real estate activities.

“This spin-off is consistent with Raymond Group’s stated objectives to simplify its corporate structure and increase shareholder value for both operational and structural benefits. Leveraging Raymond’s institutional strength, this transaction will enable independent and dedicated management teams with specific sector expertise to sharpen their focus on the businesses and adapt investment strategies to the unique dynamics of each sector,” the company said in a statement.

Raymond Group’s real estate segment reported a revenue of Rs 1,593 crore, a growth of 43% YoY, and the company’s EBITDA (earnings before interest, tax, depreciation and amortisation) was Rs 370 crore in FY24.

The group owns around 100 acres of land in Thane with around 11.4 million sq ft of RERA-approved carpet area, of which around 40 acres are currently under development. There are five ongoing projects worth Rs 9,000 crore on its Thane land, with an additional potential to generate over Rs 16,000 crore, representing a total potential revenue of over Rs 25,000 crore from this land bank.

In addition, the company has also signed three new JDAs (Joint Development Agreements) at Mahim, Sion and another at Bandra East Mumbai, taking the combined revenue potential of the four JDA projects in the Mumbai Metropolitan Region to over Rs 7,000 crore. With the Thane Land Bank development and the existing 4 JDAs, the company has a revenue potential of Rs 32,000 crore.

“This strategy of spinning off the real estate business into a separate company to be listed through automatic route is another step towards enhancing shareholder value. The existing shareholders of Raymond Limited will get the shares of the new listed real estate company in a ratio of 1:1,” said Gautam Hari Singhania, Chairman and Managing Director of Raymond.

The company said the spin-off aligns with Raymond Group’s stated objectives of simplifying its corporate structure and increasing shareholder value for operational and structural benefits. The transaction will enable independent, dedicated management teams with specific industry expertise to sharpen their business focus and tailor investment strategies to the unique dynamics of each industry.

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