Raymond Lifestyle Ltd, the demerged retail and lifestyle division of Raymond Ltd, is poised to make its market debut on today, September 5. It is the first step in the scheme of arrangement announced by Raymond Ltd, in which it plans to eventually have three separate listed businesses. Raymond shares went ex-Lifestyle business in July and the listing of the lifestyle business now, as a separate entity, is expected to unlock shareholder value.
"Trading members of the exchange are hereby informed that effective from September 05, 2024, the equity shares of Raymond Lifestyle Ltd (Scrip Code: 544240) are listed and admitted to dealings on the Exchange in the list of ''T'' Group Securities. For further details please refer to the notice no. 20240903-15 dated September 03, 2024," a statement on BSE read.
After the Raymond Lifestyle listing today, there would be two listed Raymond group companies. The Raymond board had on July 4 also approved the scheme of arrangement for demerger of real estate business to Raymond Realty. The demerged entity RRL will be listed on stock exchanges post obtaining necessary statutory/ regulatory approvals. Raymond has already filed application for grant of NOC under Regulation 37 with both the stock exchanges.
"Post completion of all formalities for both the scheme of arrangements, there will be three listed entities in the Raymond Group i.e. Raymond Limited, Raymond Lifestyle Limited and Raymond Realty Limited," Raymond said on September 3.
Arihant Capital Markets noted that the ethnic wear market is expected to grow at an 8 per cent CAGR by 2027 and that Raymond Lifestyle is planning to capitalise on the shifting dynamics, where the organised segment is projected to equal the unorganised by 2027.
"The company also plans to triple its exclusive brand outlet (EBO) network in two years. Ethnix is expected to contribute 12-15 per cent of the business, targeting Rs 1,000 crore in the next five years and they are working to reduce NWC from 76 days to 60 days," it said.
According to Antique Stock Broking, Raymond Lifestyle plans to scale up its branded apparel segment by applying the success of The Raymond Shop (TRS) to other brands. The company aims to expand its exclusive brand outlets (EBOs) through an asset-light model, with a target of opening 250-300 stores for each brand over the next three years.
RLL’s focus on its wedding portfolio, which accounts for 35-40 per cent of revenue, both directly and indirectly, is expected to drive a 15 per cent CAGR over the medium term. This growth is anticipated to be fuelled by differentiated premium products and the expansion of its ethnic store network. According to the brokerage, key areas to monitor include the scaling up of the branded apparel and ethnic portfolios, as well as success in new categories like innerwear and sleepwear.
The brokerage projects Raymond Lifestyle to deliver a revenue CAGR of 13 per cent and an Ebitda growth of 15 per cent from FY24 to FY27. It values Raymond Lifestyle at Rs 18,000 crore based on FY27 estimates.
In FY24, Raymond Lifestyle recorded sales of Rs 2,550 crore from its wedding business. Amit Agarwal, Chief Financial Officer at Raymond Group, expects the company to double its EBITDA to Rs 2,000 crore in the next three years. “We are also targeting a 12–15% sales growth in the lifestyle sector, with the aim of capturing around 7% market share in the dynamic men’s-wear wedding market by 2027,” he said.
MOFSL, which attended Raymond Lifestyle's investor conference, reported that Raymond Lifestyle incurred a capex of Rs 100 crore in FY24 to increase its production capacity to 10.7 million pieces. The company plans to invest an additional Rs 100 crore in FY25, which is expected to generate Rs 400 crore of incremental revenue by FY27, representing a 2x asset turnover ratio. Assuming an Ebitda margin of 10 per cent, this could result in Rs 40 crore of incremental Ebitda, with a post-tax incremental return on capital employed (RoCE) of 16 per cent.
MOFSL projects an 11 per cent revenue growth for Raymond Lifestyle over FY24-27.
Raymond Lifestyle's facility in Vapi, Gujarat, is the largest at 112.6 acres and contributes 45 per cent to the suiting segment’s revenue. This facility has the capability to produce high-quality suiting fabrics across various price points, according to InCred Equities. The company’s other two suiting business facilities are located in Jalgaon (38 acres) and Chhindwara (100 acres)
Raymond Lifestyle plans to add 300 new Ethnix stores over the next two to three years. The management is targeting 1.5 times growth by FY27 and 2.3 times growth by FY30 compared to FY24 levels from its wedding business. This indicates significant potential in this segment to drive substantial revenue growth.