India's Raymond Lifestyle falls after debuting with $2.2 bln valuation

Raymond Lifestyle

05/09/2024 07:42

By Praveen Paramasivam
       CHENNAI/BENGALURU, Sept 5 (Reuters) - Indian apparel
maker Raymond Lifestyle  RAYL.NS , carved out of Raymond
 RYMD.NS , notched a $2.19 billion valuation in its stock market
debut on Thursday, before shares fell by the maximum allowed 5%
as investors booked profits.
    The nearly 100-year-old Raymond had spun off its lifestyle
business this year to simplify its group structure, attract more
investors and help the carved-out entity gain better access to
capital.
    Shareholders received four shares of Raymond Lifestyle for
every five held in Raymond.
    Unlike a traditional listing after an initial public
offering, Raymond Lifestyle's listing price was derived through
a market discovery process, where the price is determined
through bids and offers received in pre-open trade.
    Raymond Lifestyle listed at a discovery price of 3,020
rupees, giving it a valuation of 183.99 billion rupees ($2.19
billion) according to data from NSE, which topped the
2,150-2,930 rupees range expected by at least three analysts.
    "The listed price is above expectations," said WealthMills
Securities equity strategist Kranthi Bathini.
    "Raymond has a very good brand strength. It has created
strong wealth creation by unlocking the value of lifestyle
business."
    The stock fell 5% to an exchange-mandated lower limit of
2,869 rupees shortly after listing, valuing the company at $2.08
billion, which analysts attributed to profit booking.
    "It might be a good idea to book profits," Hensex Securities
analyst Mahesh Ojha said, adding that the stock should trade
between 2,650 rupees and 2,700 rupees based on a one-year
forward price-to-earnings ratio.
    Raymond Lifestyle houses the group's core suits and shirts
business, includes clothing labels such as ColorPlus, and
manufactures menswear including blazers for brands globally.
    For the year ended March, Raymond Lifestyle recorded revenue
of 70 billion rupees, nearly thrice the combined revenue of its
parent's engineering and real estate businesses.
    In the next three years, Raymond expects sales growth of
12%-15% for its lifestyle business, with core earnings doubling
to over 20 billion rupees, finance chief Amit Agarwal said this
week.

($1 = 83.9750 Indian rupees)

 (Reporting by Praveen Paramasivam in Chennai and Sethuraman NR
in Bengaluru; Editing by Varun H K)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))