Raymond’s shares fell a staggering 40% following a decision to spin Raymond Lifestyle away from the parent company. This strategic shift has resulted in investor uncertainty, provoking the massive dip in share value.
The cutoff date of July 11 will define the eligible shareholders to receive shares in the newly formed Raymond Lifestyle. For every five Raymond shares previously owned, shareholders will be awarded four new shares in Raymond Lifestyle. Raymond plans to officially list this new subsidiary within the next two months.
In addition to Raymond Lifestyle, July 4 will see the launch of Raymond Realty as an independent entity. For each Raymond share currently held, shareholders will be presented with a new Raymond Realty share – a move intended to increase the flexibility of the company’s real estate business.
The parent company will maintain its identity as an engineering enterprise, focusing on steel files and tools/hardware, automobile/electric vehicle parts, and aerospace/defense sectors.
Sharp decline in Raymond’s shares post-restructuring
The aim is to become a market leader in these demanding sectors, with a strong emphasis on innovation, quality, and design competence.
A significant boost will be given to the automobile and electric vehicle division in order to reflect the growing demand for sustainable transportation. This will involve supplying high-performance components for the fast-growing electric vehicle market, while also ensuring stable production lines for more traditional automobiles.
Resources will also be devoted to the aerospace and defense sectors, with the intention of supplying engineered solutions that satisfy exacting government and private contracts. The emphasis will be on new technology, stringent safety standards, and reliability.
Raymond Lifestyle is estimated to be valued at ₹2,930 per share, with forecasts of an 18% compound annual revenue increase and a 9% rise in overall lifestyle revenue. In contrast, the real estate entity is expected to value at ₹1,200 per share. Management anticipates a 20% increase in real estate sales, alongside a stable 20% EBITDA margin and return on capital.
The company’s engineering division, however, expects to be valued substantially lower at ₹215 per share. This has contributed to a drop of 36.04% in the company’s shares, hitting a low of ₹2,001.30 during a recent trading session and raising concerns among stakeholders and the wider market.
