Raymond Shares Plummet 66% Post-Demerger: Unpacking the Raymond Realty Split
FINANCE
On May 14, 2025, Raymond Ltd’s stock witnessed a dramatic 66% decline, dropping to ₹530 from its previous close of ₹1,561.30. The steep fall coincided with the stock turning ex-date for the demerger of its real estate arm, Raymond Realty, which officially separated from the parent company on May 1, 2025. This significant price adjustment reflects the market’s recalibration of Raymond’s value, now stripped of its real estate business. Here’s a deep dive into why the stock bled, the implications of the demerger, and what lies ahead for both Raymond Ltd and Raymond Realty.
Understanding the Demerger and Stock Price Drop
The demerger of Raymond Realty is part of Raymond Ltd’s broader strategy to streamline its operations and unlock shareholder value by creating focused, independent entities. Previously, Raymond demerged its lifestyle business, Raymond Lifestyle, which listed on stock exchanges in September 2024. The real estate demerger follows a similar playbook, with Raymond announcing that shareholders would receive one equity share of Raymond Realty for every Raymond share held. May 14, 2025, was the record date for determining eligible shareholders for this allotment.
The 66% plunge in Raymond’s stock price is primarily a technical adjustment. As the stock went ex-date, its price no longer reflected the value of Raymond Realty’s assets, which include a robust portfolio of real estate projects and a significant land bank. The market adjusted Raymond’s valuation to account solely for its remaining businesses, primarily textiles and apparel. Some mobile trading apps may still display unadjusted prices, leading to confusion among investors about the extent of the drop.
However, the sharp decline doesn’t necessarily indicate a loss in overall shareholder wealth. Investors now hold shares in both Raymond Ltd and the soon-to-be-listed Raymond Realty, with the latter expected to debut on exchanges by the September 2025 quarter. The combined value of these holdings could potentially align with or exceed the pre-demerger valuation, depending on market reception and Raymond Realty’s performance.
Raymond Realty’s Financial Performance
Raymond Realty has emerged as a strong player in the Mumbai Metropolitan Region (MMR), with a focus on residential and commercial projects in Thane and beyond. In the fourth quarter of FY25, the business reported a booking value of ₹636 crore, driven by key projects such as The Address by GS 2.0, Invictus, Park Avenue – High Street Retail in Thane, and the joint development agreement (JDA) project The Address by GS in Bandra. Revenue for the quarter stood at ₹766 crore, a 13% year-on-year increase, with an EBITDA of ₹194 crore and a healthy margin of 25.3%.
The demerger has left Raymond Realty in a financially robust position, with a net cash surplus of ₹399 crore. This liquidity provides the company with the flexibility to pursue new opportunities and deliver projects on time. Gautam Hari Singhania, Chairman and Managing Director of Raymond, emphasized the strategic intent behind the move: “This demerger underscores our commitment to driving sustainable growth through pure-play businesses while enhancing shareholder value.”
Strategic Expansion and Growth Prospects
Raymond Realty is aggressively expanding its footprint beyond Thane, leveraging the JDA model to secure high-value projects. In Q4 FY25, the company signed two additional JDAs in Mahim and Wadala, with a combined potential of ₹6,800 crore. These projects bring Raymond Realty’s total JDA portfolio outside Thane to six, positioning it as a formidable player in MMR’s competitive real estate market.
The Mahim and Wadala projects are expected to drive significant growth, capitalizing on the increasing demand for premium residential and commercial spaces in Mumbai. By focusing on timely project delivery and sustainable development, Raymond Realty aims to strengthen its brand and market share. The company’s substantial land bank assets further enhance its ability to optimize growth in a sector known for high entry barriers and capital intensity.
Implications for Raymond Ltd
For Raymond Ltd, the demerger allows sharper focus on its core textile and apparel businesses, which have historically been its backbone. By shedding its real estate and lifestyle divisions, Raymond can streamline operations, improve capital allocation, and potentially enhance profitability. However, the immediate market reaction—a 66% stock price drop—reflects the significant value previously attributed to Raymond Realty within the parent company’s structure.
Investors will be closely watching how Raymond Ltd navigates this transition. The company’s ability to maintain its competitive edge in textiles, innovate in product offerings, and manage costs will be critical to restoring investor confidence. Additionally, the performance of Raymond Lifestyle, now a separately listed entity, may influence perceptions of Raymond Ltd’s overall strategy.
Market Outlook and Investor Considerations
The demerger trend among Indian conglomerates, as seen with companies like Reliance and Tata, reflects a broader shift toward creating specialized entities to unlock value and improve operational efficiency. For Raymond shareholders, the demerger offers exposure to a promising real estate business with strong growth potential, alongside a leaner Raymond Ltd focused on its core strengths.
However, investors should exercise caution. The real estate sector is sensitive to macroeconomic factors such as interest rates, regulatory changes, and demand fluctuations. While Raymond Realty’s financials are robust, its ability to execute high-value projects and meet listing expectations will be critical. Similarly, Raymond Ltd must demonstrate resilience in its textile business to regain market trust.
For now, the 66% drop in Raymond’s stock price is a technical adjustment rather than a reflection of fundamental weakness. Investors should evaluate the combined value of their holdings in Raymond Ltd and Raymond Realty once the latter lists. Those with a long-term horizon may find the demerger a compelling opportunity, given Raymond Realty’s growth trajectory and Raymond Ltd’s established market presence.