Shares of Raymond Lifestyle Limited (RLL), a textiles and apparel maker demerged from the Gautam Singhania-led Raymond, froze in lower circuit of 5 per cent at Rs 2,869, after listing at Rs 3,020 on the National Stock Exchange (NSE) on Thursday.
The company’s stock also hit an intra-day high of Rs 3,100 on the BSE and NSE after listing.
Around a combined 120,000 shares had already changed hands, while there were pending sell orders for 160,000 shares on the NSE and BSE till 10:09 AM.
The scrip will be in Trade-for-Trade segment, where each transaction requires mandatory delivery, for 10 trading days.
Raymond has one of the largest exclusive retail networks in the country with about 1,450 stores in more than 600 towns.
The company had announced a share exchange ratio of 4:5, which means four shares of RLL would be allotted to shareholders for every five shares of Raymond that they held.
Net revenue declined 8 per cent YoY to Rs 1,249 crore from Rs 1,353 crore in the year-ago quarter.
The company’s management said the lifestyle business was impacted due to subdued consumer demand, prolonged heat waves, general elections, fewer wedding dates and inflation, which affected its overall revenue performance and margins.
As India continues to be a preferred sourcing destination, the China-plus-one strategy is playing its part, the company’s management said, while adding that Raymond is expanding its garmenting capacity by a third of its current levels. Once fully commissioned, this capacity expansion would make Raymond the third largest suit maker in the world, management noted.
The company aims to introduce new initiatives to bolster growth during this period.
In the branded apparel segment, Raymond aims to diversify its product range through the demerger of its lifestyle business, which will facilitate new launches in its core portfolio, and emphasise casualisation and expansion of its Ethnix wear category.
The company reiterated its guidance of 12-15 per cent revenue growth and doubling of Ebitda to over Rs 2,000 crore by FY28 (that is 19 per cent CAGR) in the lifestyle business. This, along with a reduction in working capital to 60 days, should result in free-cash-flow generation of Rs 600-700 crore annually.
The management’s aspirational growth targets will be supported by the doubling of its exclusive brand outlets (EBO) network to more than 900 stores by FY27; capitalising on the Bangladesh +1, China +1 and free trade agreement (FTA) opportunities; the extension of new categories such as innerwear and sleepwear; and the wedding wear opportunity, said Motilal Oswal Financial Services in a company update.
However the analyst meet on Lifestyle 2.0 brought to light its position in the wedding wear segment and aggressive targets, implying a sizeable business going ahead (Rs 3,800 crore/Rs 5,800 crore in FY27F/30F, as per management’s 1.5x/2.3x targets, respectively, over the FY24 level of Rs 2,540 crore).
“Considering that Vedant Fashion gets a 16x FY26F EV/sales valuation for its wedding business, RLL’s valuation has the potential for an upside, above our/street estimates going ahead”, analysts at InCred Equities said in an analyst meet update.
The board has also approved the scheme of arrangement for the demerger of its realty business to Raymond Realty Limited (RRL) to unlock the value for shareholders and harness growth potential in the Indian property market.
The demerged entity RRL will be listed on the bourses after obtaining the necessary statutory and regulatory approvals, the company said.
Raymond shareholder will receive one share of RRL for every one share of Raymond they hold.
First Published: Sep 05 2024 | 10:52 AM IST
