Raymond Share Price Soars 18% in 3 Days Amid Demerger Plans; Is It Time to Invest in This Multibagger Stock?

Raymond Share Price Soars 18% in 3 Days Amid Demerger Plans; Is It Time to Invest in This Multibagger Stock?

Raymond Share Price Buzzes with 50% Return Since June, Creating a Buying Opportunity in This Multibagger Stock. The Upcoming Demerger into Raymond Realty and the Positive Outlook on Real Estate and Engineering Businesses Have Led to a Re-Rating.

Raymond Share Price Soars 18% in 3 Days Amid Demerger Plans; Is It Time to Invest in This Multibagger Stock?

Raymond’s share price has garnered attention in recent sessions following the announcement of a vertical demerger into Raymond Realty, the company’s real estate unit. Upon completion of this demerger and after obtaining all necessary regulatory approvals, Raymond and Raymond Realty will operate as separate listed companies within the Raymond Group.

On Monday, Raymond’s share price surged over 8%, reaching a new 52-week high. The stock opened at ₹3,292 per share on the BSE, hitting an intraday high of ₹3,493 and a low of ₹3,276.

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, noted that Raymond’s share price has been buzzing over the past few weeks, delivering a remarkable return of more than 50% since June. The momentum remains positive, making any dip a buying opportunity. The next support level is around ₹3,000, with key resistance expected between ₹3,800 and ₹4,000.

Raymond’s share price has soared by 738% over the last three years, providing investors with substantial multibagger returns. The stock has gained about 18% in just three days.

In a recent report, brokerage Systematix Institutional Equities increased Raymond’s target price by 36%, from ₹2,700 to ₹3,681, while maintaining a ‘buy’ rating.

According to the brokerage, Raymond’s stock has surged over the past month as the demerger date of the lifestyle company approaches (July 11). The announcement of the demerger in the real estate sector gave the stock an additional boost on Friday, rising 10%, culminating in a 49% increase over the past month. Despite the target price being surpassed ahead of their predictions, Raymond has remained one of their high-conviction ideas.

The brokerage believes the market’s recognition of the potential in Raymond’s non-lifestyle growth levers—real estate and engineering, which were previously undervalued—has led to the significant re-rating following the demerger announcements. Additionally, the realization that the lifestyle industry, primarily B2C, is trading close to the values of a B2B apparel firm suggests further growth potential, contributing to the re-rating in this sector.

We have revised our estimates upwards for the real estate and engineering businesses to account for the traction in new JDA project signings and the focus on the aerospace/defense segments, respectively. This adjustment allows us to increase our price target for the stock, applying what we consider fair multiples for the three businesses based on their current scale and potential. Further re-rating will depend on the subsequent execution by the separate businesses under their respective leadership,” the brokerage stated.

Fair Values of Listed Entities Post-Demerger

The brokerage has valued the real estate business at ₹1,076 and the engineering business at ₹507, using 12x and 15x FY26E EV/EBITDA multiples, respectively.

Accordingly, the brokerage believes that the remaining firm has a fair value of ₹1,583 after the demerger of the lifestyle sector next week. The brokerage views any mispricing of the remaining business on the demerger date as a buying opportunity into a promising combination of a growing real estate and engineering firm, even though the lifestyle business will take around two months to get listed.

“We see further upside potential for the remaining business if the company can establish its credibility in the real estate market outside Thane and the high-potential aerospace/defense segments,” the brokerage stated.

Raymond Share Price Soars 18% in 3 Days Amid Demerger Plans; Is It Time to Invest in This Multibagger Stock?

Demerger Summary

According to the brokerage’s report, the business 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 upon completion, with no monetary consideration involved. With sales of ₹15.9 billion and EBITDA of ₹3.7 billion in FY24, Raymond’s Real Estate division has achieved scale and is well-positioned to pursue its own growth path as a distinct business, making this a strategic decision.

In June 2024, Raymond’s restructuring plan was accepted by NCLT, involving the demerger of its Lifestyle division and the consolidation of its consumer trade division. Equity shares in Raymond Lifestyle will be distributed to shareholders according to a swap ratio of 4 equity shares in Raymond Lifestyle for every 5 shares held in Raymond. The lifestyle company will consist of approximately 60.9 million shares. This restructure aims to improve operational efficiencies, attract targeted investments, and realize the full potential value of Raymond’s business verticals.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.