Most of the companies do a de-merger of some of their lucrative business to provide value-unlock to the shareholders. All of them will get an equivalent amount of shares in the demerged, listed entity.
I am just wondering if Raymond will do the same with their RE or any other business in the future. They have made the realty arm as a 100% subsidiary of Raymond Ltd. Does anyone see a possibility of that happening as their realty business looks really promising. They have 120 acres of land bank and building residential properties on own land bank is giving them very good profitability. For their Ten X habitat itself, they have mentioned total revenue of 3000 crores and profits of around 750-800 crores (EDITDA I guess but no clear mention of it). And they are about to launch their second project soon as shown in their website (called "The Address by GS in website & “West One Park” in Maha RERA website). And there are couple of more such projects already available in the RERA website and in the process of getting necessary approvals. All of them seem to be located near the TenX property and looks to be being developed on their own land bank.
All this looks interesting. Just hoping they would do some kind of de-merger thing to really unlock value for shareholders directly (unlike making an OFS for their JK files business where Raymond shareholders only get a benefit if Raymond stock prices go up)
They decided to go for OFS of their Engineering business due to deleverage the Raymond Balance Sheet (repay debt).
Once this Raymond Ltd become debt free, this share will be rerated since it’s peers are trading 6X market cap of their sales . So shareholders may get bigger benefit once balance sheet deleveraged than demerger. As per my knowledge, Raymond has taken very best decision of OFS of Engineering business instead of demerger. In case of demerger, debt repayment may take longer time, so that we don’t get any appreciation from Raymond ltd for such big sales. However, please correct me if am wrong here
I think Raymond may monetize part of land and repay remaining debt and post that demerger may happen for Raymond realty I think. I hope we should wait to understand this game next 3 to 4 years
The last line says “…other than existing properties of the company situated at Thane”. They have a big land bank in Thane and their current two residential projects are being developed there. So those two projects and any future ones in those land bank will not be part of this subsidiary?
I thought they plan to have one fully owned subsidiary for their entire RE business
We will have to wait till next week Q3 con-call to get more info on the “redevelopment” part. But in the recent past, they have stated eagerness to go for joint / co development of projects beyond Thane. I guess this falls under that as it says “Joint & Redevelopment”. So land should be from some other entity. Would be interesting to see their profit margins on projects built on non-owned land.
For the past few months, the management is showing (positive) aggression on lot of areas. Hope the plans materialize and the current under-valuation of company is addressed
taxes was higher due to one time div from associate comapany due to sale of land with tax of about 30cr… as per concall… or atlest that is what i understood
Yes, that seems to be the case. Overall, very good results, particularly the revenue visibility on the RE business. But somehow market reaction is a bit subdued. I wonder how should Raymond be valued. They have a very healthy textile, engg & real estate business. The last two will perform well with or without covid. Yet the valuations of Raymond seems to be very much on the lower side particularly when compared with that of Aditya Birla Fashions.
With out making it complicated about valuation if we project raymonds net profit for the current Q to next 4 Q… ( given how much wedding demand is pent up due to covid in last 2 year…)
total profit can be 350-400 cr for the coming fiscal… which is the highest profit this company has ever achieved in its existance… so wont be unreasonable to assume it will hit its all time high market price… of Rs.1144 … This company is undervalued as hell imho…
