Raymond LifeStyle Listing: Shares Hit Lower Circuit Upon Listing; Parent Company Raymond Falls Over 3%
Raymond LifeStyle Listing
Raymond Lifestyle’s Market Debut: Shares Fall to Lower Circuit, Raymond’s Stock Declines
Raymond Lifestyle’s Market Entry
Raymond Lifestyle, the retail and lifestyle arm of the Raymond Group, has officially made its debut on the domestic stock exchanges today. This marks a significant milestone in the company’s strategy to carve out a distinct presence in the market.
The shares of Raymond Lifestyle were listed at Rs 3000 on the Bombay Stock Exchange (BSE) and Rs 3030 on the National Stock Exchange (NSE). Despite a promising start, the stock faced an immediate downturn as trading progressed.
Due to a wave of profit-taking by investors, Raymond Lifestyle’s shares experienced a swift decline, dropping by 5% and hitting the lower circuit limit at Rs 2850 on the BSE.
The share price closed the trading day at this lower circuit level, reflecting the volatility and cautious sentiment among investors.
In contrast, the shares of Raymond, the parent company, also struggled, closing at Rs 2031.45 on the BSE, marking a decrease of 2.24%. During intra-day trading, Raymond’s stock saw a more pronounced dip, falling by 3.61% to reach Rs 2003.10.
Strategic Realignment and Future Listings
Raymond Group’s recent restructuring efforts have led to a series of strategic moves aimed at enhancing market value and operational efficiency.
Following the debut of Raymond Lifestyle, the group is preparing for another major development: the listing of Raymond Realty, its real estate division.
On July 4, Raymond’s board approved the spin-off of Raymond Realty, which is slated for listing on the domestic exchanges in the near future.
The process of listing Raymond Realty is already underway, with the company having submitted applications to both the BSE and NSE to obtain a No Objection Certificate (NOC) under Regulation 37.
This regulatory approval is a crucial step in the listing process, ensuring that all necessary conditions and requirements are met.
Raymond Group has indicated that the listing of Raymond Realty will further bolster the group’s market presence, bringing the total number of publicly traded entities under the Raymond umbrella to three: Raymond, Raymond Lifestyle, and Raymond Realty.
Brokerage Insights and Financial Projections
A comprehensive analysis by Motilal Oswal Financial Services Limited offers valuable insights into Raymond Lifestyle’s financial performance and future prospects.
For the fiscal year 2024, Raymond Lifestyle achieved a significant milestone by increasing its production capacity to 1.07 crore pieces.
This expansion was supported by a capital expenditure of Rs 100 crore. The company’s growth strategy includes a further investment of Rs 100 crore in the current financial year, with the aim of generating an additional revenue of Rs 400 crore by FY 2027.
The brokerage’s report highlights that Raymond Lifestyle is expected to benefit from an EBITDA margin of 10%, translating into a potential increase in EBITDA by up to Rs 40 crore.
The incremental Return on Capital Employed (RoCE) is projected to reach 16% after tax, reflecting the company’s efficient capital utilization and profitability.
Additionally, the brokerage forecasts a steady revenue growth rate of 11% per annum from FY 2024 to FY 2027, driven by increased production capacity and strategic investments.
Operational Strengths and Expansion Plans
Raymond Lifestyle’s operational strengths are a key factor in its growth trajectory. The company’s largest manufacturing facility is located in Vapi, Gujarat, and plays a pivotal role in its suiting revenue.
This facility is capable of producing high-quality suit fabrics across various price points, catering to diverse market segments.
The Vapi plant contributes approximately 45% of Raymond Lifestyle’s total suiting revenue, underscoring its importance in the company’s supply chain.
In addition to the Vapi facility, Raymond Lifestyle operates two other suiting business facilities in Jalgaon and Chhindwara. These facilities further bolster the company’s manufacturing capabilities and distribution network.
To support its ambitious growth plans, Raymond Lifestyle is set to expand its retail footprint significantly. The company has outlined a strategy to open 300 new ethnic stores over the next two to three years.
This expansion is expected to enhance the brand’s market presence and drive revenue growth, tapping into the growing demand for ethnic wear.
Market Sentiment and Investor Outlook
The market’s initial reaction to Raymond Lifestyle’s listing reflects a cautious sentiment among investors. The immediate drop in share price following the listing can be attributed to various factors, including profit-taking, market volatility, and investor sentiment.
Despite the initial downturn, the long-term outlook for Raymond Lifestyle remains positive, supported by its robust growth strategy and expansion plans.
As Raymond Lifestyle continues to expand its production capacity and retail presence, the company is well-positioned to capitalize on emerging market opportunities.
The anticipated listing of Raymond Realty and the continued focus on strategic investments further reinforce the Raymond Group’s commitment to enhancing shareholder value and market position.
In summary, Raymond Lifestyle’s market debut has been marked by a challenging start, with its shares hitting the lower circuit limit due to profit booking.
However, the broader strategic context—including the planned listing of Raymond Realty and the company’s ambitious growth plans—suggests a positive long-term outlook.
As the Raymond Group navigates these developments, investors and market observers will be closely watching the company’s performance and strategic execution in the coming months.
