Raymond Share Price Soars 18% in 3 Days Amidst Demerger Plans: Should You Invest in This Multibagger Stock?

Raymond’s share price has been making headlines recently due to the announcement of a vertical demerger into Raymond Realty, the company’s real estate unit. Once all necessary regulatory approvals are in place, Raymond and Raymond Realty will operate as separate listed companies under the Raymond Group.

Recent Performance

On Monday, Raymond’s share price surged over 8%, hitting a new 52-week high. The stock opened at ₹3,292 on the BSE, reached an intraday high of ₹3,493, and a low of ₹3,276. Over the past few sessions, Raymond’s share price has jumped 18%, continuing its impressive 738% growth over the last three years.

Analyst Insights

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, noted that Raymond’s stock has been buzzing for weeks, delivering over 50% returns since June. He suggests that any price dip should be seen as a buying opportunity, with support around ₹3,000 and resistance between ₹3,800 and ₹4,000.

Brokerage Opinions

Systematix Institutional Equities recently increased its target price for Raymond by 36% to ₹3,681 from ₹2,700, maintaining a ‘buy’ rating. The brokerage highlights that Raymond’s stock has surged as the demerger date approaches (July 11). The demerger of the real estate business has significantly re-rated the stock, with a 49% increase over the past month.

The brokerage believes the market is now recognizing the potential of Raymond’s non-lifestyle segments, particularly real estate and engineering, which were previously undervalued. The lifestyle sector, being largely B2C, is also gaining prominence and is expected to see further re-rating.

Revised Estimates

Systematix revised its estimates for Raymond’s real estate and engineering businesses due to new project signings and a focus on aerospace and defense segments. They value the real estate business at ₹1,076 and the engineering business at ₹507, with fair multiples of 12x and 15x FY26E EV/EBITDA, respectively.

Following the demerger, the brokerage values the remaining Raymond firm at ₹1,583. They see any mispricing post-demerger as a buying opportunity into a rising real estate and engineering firm.

Demerger Details

Raymond plans to issue 66.5 million shares of Raymond Realty, each with a face value of ₹10. Shareholders will receive one Raymond Realty share for each Raymond share they hold. No monetary consideration is involved. Raymond’s Real Estate division, with FY24 sales of ₹15.9 billion and EBITDA of ₹3.7 billion, is poised for growth as a distinct business.

In June 2024, Raymond’s restructuring plan was approved by NCLT, involving the demerger of its Lifestyle division and consolidation of its consumer trade division. Shareholders will receive equity shares in Raymond Lifestyle based on a swap ratio (4 equity shares in Raymond Lifestyle for every 5 shares in Raymond).

Conclusion

With the demerger set to unlock significant value in Raymond’s diverse business segments, the stock presents a compelling investment opportunity. Analysts suggest continued upside potential, particularly in the real estate and engineering sectors, making Raymond a promising addition to any portfolio.