Unlocking Value Through Demergers: The Raymond Limited Story and Lessons from Raymond Realty

Demergers have emerged as a powerful strategy for Indian conglomerates to unlock hidden value, allowing shareholders to benefit from focused, standalone businesses. Our investment journey with Raymond Limited, a diversified group with interests in textiles, real estate, engineering, and now electric vehicles (EV) and aerospace, exemplifies this trend. In this blog, I’ll share our experience with Raymond’s demergers of Raymond Lifestyle and Raymond Realty since 2024, with a particular focus on the Raymond Realty demerger. We’ll also discuss our continued holding in Raymond Limited, betting on its promising EV and aerospace ventures. The key takeaway? Demergers can create significant value, but the newly listed entities aren’t always bargains, and strategic timing is critical.

Our Journey with Raymond Limited

We started investing in Raymond Limited before the announcement of its lifestyle business demerger in 2024. Raymond’s diverse portfolio—spanning textiles, apparel, real estate, and engineering—offered a compelling value proposition. The company’s “Raymond 2.0” strategy, aimed at sustainable growth across these verticals, further bolstered our confidence. When Raymond announced the demerger of its lifestyle business into Raymond Lifestyle Limited (RLL), approved by the board on July 4, 2024, we increased our position, anticipating that separating the lifestyle business would unlock value by allowing each entity to focus on its core strengths.

The lifestyle demerger delivered handsomely. Raymond Lifestyle listed on the Indian stock exchanges on September 5, 2024, at approximately ₹3,000 per share, reflecting strong market enthusiasm. Post-listing, the stock consolidated around ₹1,000. As Raymond’s flagship business, known for its branded textiles and apparel like “The Complete Man” suiting, Raymond Lifestyle remains a cornerstone of the group’s legacy. With a market cap of ₹6 pearls708 crore and revenue of ₹6,387 crore in FY24, we chose to hold our shares without selling, confident in its long-term potential. A year after the listing, we’re still evaluating whether to increase our stake, given the stock’s stabilization and the competitive dynamics of India’s apparel market.

 

The Raymond Realty Demerger: A Cautious Exit

In 2025, Raymond announced the demerger of its real estate business into Raymond Realty Limited (RRL). The move created a pure-play real estate entity with a 100-acre land parcel in Thane (40 acres under active development and 60 acres for future projects). Raymond Realty reported a 45% revenue increase to ₹2,313 crore in FY24–25 from ₹1,593 crore the previous year, with sales bookings of ₹2,314 crore and plans for housing projects worth ₹14,000 crore in the Mumbai Metropolitan Region (MMR). Its EBITDA margins of 23% in FY24 outpaced the group’s average of 17%, signaling strong profitability.

However, we approached Raymond Realty with caution. The stock listed on July 1, 2025, at ₹1,005 on the BSE and ₹1,000 on the NSE, slightly below the discovered prices of ₹1,031.30 and ₹1,039.30, respectively. We sold our shares shortly after listing at around ₹990, uncertain about the valuation of this relatively new player in a competitive real estate market. The stock has since corrected to approximately ₹625 as of August 2025, validating our decision to exit. While Raymond Realty’s fundamentals are strong—bolstered by a net debt-free model and a projected 20%+ annual growth rate—we weren’t convinced the listing price reflected a margin of safety.

  

Holding Raymond Limited: Betting on EV and Aerospace

While we exited Raymond Realty, we continue to hold our shares in Raymond Limited, betting on its engineering, tools, auto components, and aerospace businesses, with a particular focus on its foray into electric vehicles (EV) and aerospace. Raymond Limited’s remaining businesses, post-demerger, reported revenue of ₹9.5 billion in Q3 FY25, up 40.6% year-on-year, with EBITDA soaring 75.3% to ₹1.4 billion. The stock hit a 52-week high of ₹3,496 on July 8, 2024, though it also saw a low of ₹1,216 on March 17, 2025, reflecting volatility post-demerger.

Raymond’s engineering and aerospace division, housed under its wholly-owned subsidiary JK Files & Engineering, is gaining traction. The company has ventured into high-growth sectors like aerospace component manufacturing and EV auto components, aligning with India’s push toward sustainable mobility and defense self-reliance. In FY25, Raymond’s engineering segment reported strong order books, driven by global partnerships and technological advancements, as highlighted by Chairman Gautam Singhania in the “Raymond 2.0” vision. The EV and aerospace sectors are poised for growth, with India’s EV market expected to grow at a 40% CAGR through 2030, fueled by government incentives and rising consumer demand. Raymond’s focus on precision engineering and auto components positions it to capture this upside, while its aerospace business benefits from India’s increasing defense exports.

Our optimism stems from Raymond Limited’s ability to leverage its engineering expertise and debt-free balance sheet to capitalize on these high-growth sectors. However, we remain mindful of execution risks and market volatility, which could impact near-term performance.

 

The Demerger Value-Unlocking Play: Not Always a Bargain

Raymond’s demergers highlight the potential of corporate restructuring to unlock value. Studies suggest that the combined market value of demerged entities can surge by 14% to 450% post-separation. By spinning off its lifestyle and realty businesses, Raymond has enabled investors to bet on specific sectors without the drag of a conglomerate’s mixed performance. The lifestyle demerger rewarded early investors like us, with the stock’s initial listing at ₹3,000 reflecting market optimism. However, Raymond Realty’s journey shows that demerged entities don’t always trade at attractive valuations post-listing.

Our decision to sell Raymond Realty at ₹990 was driven by uncertainty over its market positioning and valuation. The subsequent drop to ₹625 underscores the importance of timing exits carefully. Meanwhile, our continued holding in Raymond Limited reflects confidence in its EV and aerospace prospects, which we believe are undervalued in the current market.

  

Key Takeaways for Investors  

•  Demergers Unlock Value: Separating businesses allows each entity to focus on its core, often leading to higher combined market valuations.
•  Timing Is Critical: Post-listing hype can inflate prices, as seen with Raymond Realty’s debut. Be cautious of buying at peak valuations.
•  Assess Fundamentals: Raymond Realty’s strong revenue growth and land bank are promising, but market sentiment and competition can impact valuations.
•  Diversify Bets: Holding Raymond Limited for its EV and aerospace potential balances our portfolio, leveraging high-growth sectors while managing risks.

Demergers are a powerful tool for unlocking value, but they’re not a guaranteed win. Our journey with Raymond Limited shows that while the strategy can pay off, success hinges on disciplined analysis and strategic timing. Have you invested in demergers or are you eyeing Raymond’s EV and aerospace play?

 

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