MUMBAI: Raymond Realty, which will begin public trading from Tuesday after a hiving off from the parent Raymond, and has a Rs 40,000-crore projects in the pipeline across seven projects, will not be taking up new projects if the margin is less than 20%, its top management has said.
The shares of the Gautam Singhania-led Raymond, which is the oldest consumer brand with a century of presence, had announced a 1:1 share swap—which means a Raymond shareholder will get one each share in the realty arm upon hiving off/demerger from May 1 this year, rallied 14% on Monday a day head of the listing to Rs 711.70 on the BSE, whose benchmark declined 50 bps on profit booking. Brokerages are expecting the realty arm to open trading in the range of Rs 897 to Rs 1,430 (according to SBI Caps) and Rs 1,383, according to Ventura Securities.
Raymond Realty will launch projects with a gross development value of Rs 6,000-10,000 crore, the management.
The listing will leave the Raymond group with three listed entities—Raymond that is into apparel and textiles, Raymond Lifestyles and Raymond Realty.
Group chairman and managing director Gautam Singhania said some of the recent realty deals have seen prices getting "heated up" and made it clear that financial discipline is of utmost importance for the six-year-old company which has been debt-free since FY2024.
"I will do a deal only if it delivers on financial returns," Singhania told reporters on the eve of the realty arm’s listing.
His chief executive Harmohan Sahni chipped in saying “they will look at only those projects which can deliver profit margins of over 20%.”
Typically, Raymond Realty looks at using own land bank or redevelopment or greenfield projects starting with land acquisition or joint developments to launch profits, Sahni said.
He said the company has looked at 1,400 projects till now, and signed on only six of them. The management also denied there being any dearth of land or projects. The company is sitting over 100 acres of land bank, they added.
Singhania said the realty arm is targeting a topline growth of 15%, and an operating profit margin of 20%. It closed FY25 with a topline of Rs 2,300 crore from which it had earned a pre-tax profit of Rs 370 crore, Sahni said, adding the company also had a Rs 2,300 crore booking income in the same year which will be realized later.
Typically, the company will launch projects where units will sell Rs 1-5 crore range, though it may sell some projects with higher ticket sizes.
Singhania said the company has embarked on a journey as a focused, pure-play branded real estate firm. "With a firm emphasis on professional management, robust corporate governance, shareholder interest and transparency, we are well-positioned to achieve our long-term aspirations," he said.
Raymond Realty is targeting a 30% increase in its sales bookings this fiscal year to Rs 3,000 crore on a strong launch pipeline of residential projects and robust demand, Sahni said, adding it looks to launch six residential projects this fiscal in the Mumbai Metropolitan Region, with an estimated revenue potential of about Rs 14,000 crore. Its total sales potential over the next five to seven years is Rs 40,000 crore, he added.
The company's business model is powered by its 100-acre land bank in Thane and a low asset intensity expansion approach via joint development agreements in Mumbai's premium locations such as Bandra, Mahim, Sion, and Wadala.
The Thane land bank itself holds a revenue potential of around Rs 25,000 crore, with 40 acres presently under development, and Rs 9,000 crore revenue potential. The remaining 60 acres is slated for future development with Rs 16,000 crore revenue potential over the next seven years.
These six joint development authorities in Mumbai provide an added gross development value of around Rs 14,000 crore. This would ensure healthy profitability and cash flows without stressing the balance sheet, as the real estate firm is primarily responsible for construction.