Shares of Gautam Singhania's consumer lifestyle business, Raymond Lifestyle Ltd., will be listed on the stock exchange on Sept. 5. The flagship company has also initiated demerger of the real estate business and once all approvals come through the group will have three listed businesses:
Consumer lifestyle.
Real estate.
Engineering and defence.
The company had demerged its consumer lifestyle business from Raymond Ltd. to create a pure play consumer branded apparel and textiles business. Post the demerger, Raymond Lifestyle will have four key segments:
Wedding and ethnic wear.
Garments exports.
Branded apparel.
Textiles.
The demerger will also allow the street to assign value to each of these business verticals, in line with the market value assigned to these segments.
How To Value Raymond Lifestyle
The consumer lifestyle business gets nearly 36% of its revenue from wedding and ethnic wear segment. Its next biggest segment is the branded apparel segment followed by garment exports and textiles.
The company is betting on the wedding and ethnic business segment to drive valuation and growth. It already enjoys little over 20% in Ebitda margins. While the other businesses enjoy Ebitda margins in low single digits.
The wedding and ethnic wear segment of Raymond can be compared with Vedant Fashions Pvt.—the owner of brand Manyavar. Branded apparels can be compared with Aditya Birla Fashion & Retail Ltd. While, the garment exports with Gokaldas Exports Ltd. and textile with Arvind Ltd.
While Raymond's wedding and ethnic wear segment is similar to Vedant Fashions, the Manyavar owner trades at a higher price to earnings ratio of 38-times fiscal 2025 earnings and also enjoys a higher Ebitda margin.
Raymond has guided for topline growth in the range of 12-15% per annum. It has also guided for doubling of Ebitda by fiscal 2027. Assuming a 15% growth in bottomline, profit after tax could be around Rs 640 crore in fiscal 2025.
At a 30-times price to earnings (a nearly 21% discount to Vedant Fashion), the company would have a market cap of nearly Rs 19,165 crore and a discovered price of around Rs 3,142 per share upon listing.
Another way to look at this business could be the market cap to sales multiple of peers and discounting it against the other industry players. This could give it a market cap of around Rs 47,000 crore, thereby giving the company a share value of nearly Rs 7,800 per share.
Raymond has recently entered into the innerwear and sleep wear segment. This segment is also valued at a premium by the street, given how Page Industries Ltd. is valued. But it is yet to make a significant impact to the topline.
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