Shares of Raymond showed a 40 per cent gap down opening on Thursday as the stock traded ex-demerger after the lifestyle business was spun-off from the company. Thursday's opening price showed the stock value of the company, net of its lifestyle business.
The demerged entity of Raymond will be separately listed on the stock exchange in August-September. Existing investors of Raymond would be offered four shares of Raymond Lifestyle for every five Raymond shares. Thursday, July 11 was fixed as the record date for the demerger of the business.
Shares of Raymond Ltd had opened at Rs 1,950 on Thursday, about 38 per cent below the previous close at Rs 3,152.65 on Wednesday. However, the stock saw some follow-up buying post the re-listing of the company (net of lifestyle business) and hit an upper circuit of 5 per cent to Rs 2047.45. The total market capitalization of the company stood at Rs 13,630 crore.
The stock has been listed in the 'T' category, which means that intra-day trading is not possible in the stock. One has to take delivery in their demat account in order to sell the stock. Also, the stock will have a circuit limit of 5 per cent for the first 10 trading sessions and the circuit filter shall be revised later by the bourses.
Some analysts, reading the available charts, remain positive on the stock even after the demerger and see a strong upside possible in the stock in the coming session. They believe that the stock will continue to hog limelight at the street and is poised to deliver a strong return in the near term.
After a one-sided rally since many months, Raymond finally underwent a demerger. Although the charts are not adjusted, after the demerger the stock retested the zone of Rs 1800 from where the rally started, said Mehul Kothari, AVP Technical Research from Anand Rathi Shares & Stock Brokers.
"As of now the stock seems to be in a demand zone. Thus we advise traders to buy the stock in the range of Rs 2,000 – 1,960 with a stop loss of Rs 1,800 for upside target of Rs 2,400," he added, suggesting an upside of nearly 20 per cent in the stock.
The demerger of lifestyle business is a part of a bigger plan by the parent company Raymond, which intends to demerge real estate business too. The next spin-off of the realty business may take a 15-18 months period for completion. After completing that demerger, the existing Raymond Ltd would comprise the engineering business only.
Domestic brokerage firm InCred Equities had estimated the fair value of lifestyle business at Rs 1,982, realty business at Rs 1,086 and engineering business at Rs 499 per share.
Motilal Oswal had estimated per share value of Raymond Ltd at Rs 1,415 per share post the corporate action, which included Rs 1,200 per share value of real estate and Rs 215 of the engineering business. The Lifestyle business could be listed at Rs 2,930 per share, the domestic brokerage suggested.
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