Listing of Lifestyle business on Thursday to kickstart value unlocking at Raymond

The almost 100-year-old textile company, Raymond, is in the midst of a huge value-unlocking drive. The company's lifestyle business is set to be listed on the stock exchanges on Thursday (September 5) as a part of this exercise, which will also see its real estate business being separately listed in due course.

"Raymond, which will now have two listed entities following the demerger of its retail and lifestyle businesses, is focused on unlocking shareholder value by creating specialised businesses," it says.

Raymond is India's largest integrated manufacturer of worsted suiting. The company's portfolio includes fashion brands like Parx, Park Avenue, ColorPlus, Raymond Made to Measure, and Ethnix by Raymond.

The Ethnix brand offers a key growth opportunity for Raymond Lifestyle in the men's wear wedding market estimated to be around Rs 75,000 crore. In the year ended March 2024, the company's sales from wedding business touched Rs 2,550 crore. Raymond Lifestyle is eyeing a 7 per cent market share in the men's wear wedding market by 2027 with a 15 per cent compounded annual growth. Over the next three years, the company will triple its physical presence of Etnhix stores, opening an additional 300 outlets.

At the same time, it is entering new categories like sleepwear and innerwear, with other categories in the pipeline.

Overall, Raymond Lifestyle has plans to open 900 new outlets over the next three years.

"Raymond Lifestyle will sharpen strategic focus in this fast-growing sector to become among the top three global fabric suppliers by the end of this year," said Raymond's chairman and managing director Gautam Singhania.

He added that the global scenario also presented significant opportunities, particularly the challenges in China and Bangladesh and trade agreements with the UK, European Union and Australia.

"Given Rs 200 crore capex toward garmenting, Raymond Lifestyle would stand among the global top-3, with 10 million capacity. Garmenting enjoys macro tailwinds backed by diversification of global supply chains and potential Free Trade Agreements," said Devanshu Bansal, research analyst at Emkay Global Financial Services.

Overall, Raymond Lifestyle has targeted a 12-15 per cent compounded annual growth in revenue and 16-17 CAGR growth in EBITDA (earnings before interest, taxes, depreciation and amortization) over financial years 2024-2028, he pointed out.

The Sleepz brand will be launched next month. The sleepwear brand will follow a distributor-led model and hopes to reach around 25,000 stores in the next 18-20 months and the management is targeting Rs 500-1,000 crore revenue in the next few years, according to Tanmay Gupta, research analyst at Motilal Oswal Financial Services, who attended the company's investor conference.

Gupta noted that while the company's legacy brands were well established, they had remained under-penetrated with a total of 424 exclusive brand outlets at the end of June quarter.

"Each brand has the potential to reach at least 250 exclusive brand outlets individually. Hence, the combination of franchisee-led model and underpenetrated brands offers a strong runway of growth," said Gupta.

In comparison, Aditya Birla Fashion and Retail had 4,190 brand stores at the end of June 2024.

Once Raymond's lifestyle business is listed, the company will be looking to list its real estate business

Raymond entered the real estate business in 2019, by launching a project in Thane, in a bid to monetise its land there. Raymond's board has already approved the demerger of the realty business and this demerged entity - Raymond Realty Ltd - will be listed on the stock exchanges after obtaining necessary statutory and regulatory approvals. Raymond said it has already filed applications for grand of No Objection Certificate from the two stock exchanges.

Once all formalities for both scheme of arrangement are completed, there will be three listed entities in the Raymond Group—Raymond Limited, Raymond Lifestyle Limited and Raymond Realty Limited.