Raymond shares up by 2 per cent post board approval for consolidation plan

Shares of Raymond Limited gained 2 per cent on Tuesday after the company’s board approved to consolidate the company’s tools and hardware business into the engineering business to improve synergies and explore monetisation options for deleveraging the firm. 

Raymond has been in value unlocking mode with the consolidation exercise of combining its Tools & Hardware and Auto Components businesses under one Engineering Business. The Engineering business, which has achieved scale and improved market share in domestic and global markets, have healthy free cash flows and EBIDTA margins. Raymond is likely to do an IPO of this business in the future - the proceeds of which will be used for reducing debt on its books. 

Besides this, the company also have a long-term strategy in place for the real estate business which was launched in 2019. This division is a sustainable and profitable business led by an experienced professional team, and there are now plans to capitalise on its strengths by extending beyond Thane. To this end, the board has also given an in-person approval for subsidisation of the firm's real estate business division through a wholly-owned subsidiary of the company. 

Finally, Raymond will also consolidate its B2C business through the transferring of the apparel business into Raymond Limited in a bid to fast-track the recovery post-pandemic. This move is expected to strengthen efficiencies, streamline and simplify processes and bring in synergy benefits in terms of design & innovation, sourcing and retail network.  

The firm said to execute these decisions, it withdrew the de-merger scheme of lifestyle business announced in November 2019. 

At 2.40 pm on Tuesday, the stock of Raymond Limited was trading at Rs 458.15, up by 2.31 per cent or Rs 10.35 per share, against a 1.40 per cent decline in the benchmark index. The 52-week high of the company was recorded at Rs 473.90 while its 52-week low is Rs 262.90 on BSE.