Raymond Ltd shares jumped over 11.6 percent in trade on Friday on reports the company plans to list its lifestyle operations post demerger. The company on Thursday announced the restructuring of its core lifestyle business into a separate entity. Every shareholder of Raymond Ltd will be issued the shares of the new company in the ratio of 1:1.
Raymond said the move will create a clear demarcation of lifestyle and other businesses, leading to the simplification of the group structure.
The demerger will unlock the potential of the core Lifestyle Business through a new listed company which will feature—Branded Textile, Branded Apparel & Garmenting.
The existing company will retain its real estate projects, Thane land bank, B2B Shirting business, engineering businesses of Auto Components and Tools & Hardware, denim and FMCG business
Gautam Hari Singhania, Chairman & Managing Director, Raymond Limited said in an exchange filing: "For over three years now, we have been relentless in building the organization that is future ready and our efforts have been unwavering during this transformational journey despite multiple challenges. As we continue to build capacities for enhanced performance and delivery across verticals, demerging the core Lifestyle Business is an affirmative step towards that direction and this will also simplify the Group structure. We remain resolute to take right steps to enhance value creation for our shareholders."
In another development, Raymond Limited announced the allotment of Equity Shares and Compulsorily Convertible Preference Shares (CCPS) to JKIT, an Associate Company against the infusion of net proceeds of JKIT land sale that was announced in October 2019. A total of Rs. 350 crores will be used to repay the debt thus deleveraging the Balance Sheet of Raymond Ltd.
Speaking about the financial metrics that this development would lead to, Sanjay Bahl, Group Chief Financial Officer, Raymond ltd said , “In line with our stated strategy of asset monetisation, the infusion of net proceeds of JKIT land sale in Raymond Limited will help us in debt reduction leading to better operational efficiencies. As our balance sheet will get leaner, it will lead to a better profitability at the group level. The demerger of the Lifestyle Business will enable the Demerged Company and the Resulting Companies to have focused strategy and specialisation for sustained growth and the ability to attract investors for better access to capital.”
Elaborating the benefits of this development for the business, Sanjay Behl, CEO Lifestyle Business, Raymond ltd said, “As this iconic brand is nearing its 100th year of existence, the Lifestyle Business is at the cusp of scaling-up exponentially to leverage its true potential. With a large network of over 1500 stores across more than 600 towns and cities, Raymond Lifestyle Business offers an integrated play in the textile, apparel and garmenting segments both in domestic and global markets. With this demerger Lifestyle Business will be well positioned to capitalize on the emerging opportunities through newer capabilities across the entire value chain of ‘Fibre to Fashion’.”
At 9.52 am, Raymond shares quoted at Rs 739.80, trading 9.81 percent on BSE. The stock opened at Rs 695, up over 3 percent from its Thursday's close of Rs 673.70. It hit the day's high at Rs 752.35.
So far this year, Raymond shares have corrected by over 12 percent but the one month return on the stock is positive by 35 percent. The 10-year return on the stock too positive with the Lifestyle firm returning nearly 310 percent value to its investors.
The 30-share S&P BSE Sensex traded 80 points lower, or 0.20 percent, at 40,573.
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