Raymond - Pushing For Growth With Simplifying Structure: Motilal Oswal

Motilal Oswal Report

Our SOTP-based model values Raymond Ltd.'s real estate business at eight times FY26E enterprise value/Ebitda on embedded Ebitda, assuming pre-sales of Rs 40 billion and 25% Ebitda margin, and arrives at a valuation of Rs 80 billion (i.e., Rs 1200/share).

We assign a price/earning of 20 times on FY26E to the lifestyle business, arriving at a value of Rs 2,340/share (Rs 2,930 post demerger in Raymond Lifestyle Ltd.

The engineering business is valued at 8x FY26E EV/Ebitda, arriving at a value of Rs 215/share. The combined value of the three businesses works out to be Rs 3,755/share. We retain Buy rating on the stock.

Accordingly, we expect the per share value of Raymond will be ~Rs 1,415 (value of Rs 94 billion) after the record date (July 11, 2024), which includes Rs 1,200 of real estate and Rs 215 of the engineering business. The Lifestyle business could be listed at ~Rs 2,930/share (20 times FY26E EPS) and value of Rs 156 billion.

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