Raymond To Demerge Real Estate Business, Will It Unlock Value In Realty Biz? | ET Now

Summary

In this interview, Amit Agarwal, the CFO of Raymond, discusses the company's strategic decision to demerge its real estate business to unlock shareholder value and tap into the growth potential of the Indian property market. With robust financials and a focus on delivering a differentiated lifestyle to customers, Raymond aims to achieve a 4,000 CR revenue run rate in the next 3-4 years through a combination of its land bank and JDA model, emphasizing a manufacturing mindset for timely project delivery and a commitment to quality and affordability.

Takeaways

• 📈 Raymond is undergoing a demerger of its real estate business to unlock value for shareholders and capitalize on the growth potential of the Indian property market.
• 🏢 The real estate entity will be listed separately, providing investors with a pure play on the real estate sector without debt.
• 📊 The company has seen significant stock returns in the past 2-3 months leading up to the announcement of the demerger.
• 💼 CFO Amit Agarwal discusses the company's reorganization and the strategic direction aimed at maximizing shareholder returns.
• 🛑 Last year, Raymond demerged its lifestyle business, which is expanding rapidly, with 200 stores opened last year and plans for 500 more.
• 🏗️ The real estate business achieved revenues of 1600 crores and a book size of 2400 crores in the last fiscal year, with strong customer response to new projects.
• 📉 The company has a robust pipeline of real estate projects worth 32 to 35,000 crores planned over the next 7-8 years, indicating significant growth.
• 💰 Raymond's real estate business is financially healthy, with more than 500-600 crores in cash as of March 31st, providing a strong foundation for growth.
• 🏡 The company differentiates itself by offering not just apartments, but a lifestyle, with amenities such as clubhouses and gardens even in smaller apartments.
• 🔑 Raymond emphasizes a manufacturing mindset in its real estate business, focusing on timely delivery, financial efficiency, and providing a unique living experience.
• 📉 The company's execution capability is evident in its ability to vacate premises and start construction quickly, with projects often delivered ahead of schedule.

Q & A

What is the main purpose of Raymond's recent announcement about their real estate business?

The main purpose is to demerge the real estate business to provide investors with pure play, net debt-free businesses with solid growth potential, and to list the real estate entity separately.

What has been the impact of the reorganization on Raymond's stock price?

The reorganization has led to very good returns, with the stock price showing an increase in the last 2-3 months leading up to the announcement.

What was the revenue and book size achieved by Raymond's real estate business in the last fiscal year?

In the last fiscal year, Raymond's real estate business achieved revenues of almost 1600 crores and a book size of 2400 crores.

How many Joint Development Agreements (JDAs) has Raymond signed and what is the status of the projects?

Raymond has signed four JDAs, with work already started on one in Bandra, and they have seen an overwhelming response from customers.

What is the total project size and potential revenue that Raymond is currently working on or has in the pipeline?

Raymond is currently working on projects totaling 4 million square feet and has potential projects of 7.5 million square feet, which together could generate revenues in the range of 32 to 35,000 crores over the next 7-8 years.

What is the financial position of Raymond's real estate business as of March 31st?

As of March 31st, Raymond's real estate business is sitting on more than 500-600 crores of cash, indicating a strong financial position.

What is the expected revenue run rate for Raymond's real estate business in the next 3-4 years?

The real estate business is expected to achieve a revenue run rate of 4,000 crores with a 25% EBITDA margin in the next 3-4 years.

How does Raymond differentiate its real estate offerings from competitors?

Raymond differentiates by providing a unique lifestyle with its apartments, focusing on delivering projects well before the timeline, and maintaining market-relevant pricing.

What is the significance of the JDA model for Raymond's real estate business growth?

The JDA model allows Raymond to grow its business by leveraging joint development opportunities, especially in Mumbai, where there is a high demand for redevelopment of old buildings.

What is the sales performance of Raymond's recently launched JDA project in Bandra?

The Bandra project launched with 177 apartments and sold more than 100 apartments within 30 days of the launch, indicating a strong market response.

What is the potential revenue and IR (Internal Rate of Return) that Raymond aims to achieve with its real estate projects?

Raymond aims to achieve a potential revenue of 4,000 crores with a 25% EBITDA and a 25% IR on its real estate projects in the next 3-4 years.