Raymond Realty Ltd (RRL), a real estate subsidiary of Raymond Ltd, specializes in developing residential and commercial properties across its 100-acre land parcel in Thane. Additionally, the company has entered into joint development agreements (JDAs) for redeveloping buildings in key locations across Mumbai.
RRL has 100 acres of land bank in Thane, with 40 acres currently under development, translating to a carpet area of 4 mn sq ft. The remaining 60 acres, with a carpet area of 7 mn sq ft, is slated for future development, expected to span roughly 7 years.
The under-development 40 acres holds a revenue potential of around ~INR 9,000 cr, while the remaining 60 acres is projected to generate ~INR 16,000 cr in revenue, bringing the total potential of RRL's Thane land bank to ~INR 25,000 cr.
In addition to its Thane land, the company has entered into six JDAs in Mumbai's prime areas, including Bandra, Mahim, Sion, and Wadala, with a combined gross development value of ~INR 14,000 cr. As RRL is only responsible for construction in these projects, its profitability and cash flows will remain robust without putting any strain on its balance sheet. Given the rising demand for redeveloping aging buildings in Mumbai, RRL is actively exploring more JDA opportunities in the city and surrounding areas.
Mumbai's growing population and limited land availability have made redevelopment projects increasingly attractive. The city's push to replace old, dilapidated structures with modern, earthquake-resistant buildings is driving this trend, improving living standards and infrastructure in the process.
Over FY25-28E, revenue/ EBITDA/ net earnings are expected to grow at a CAGR of 20%/ 17%/ 15.9% respectively to INR 4,065 cr/ INR 813 cr/ INR 426 cr, while EBITDA & net margins to remain stable at 20% & 10.5% respectively. Balance sheet is expected to remain net debt zero due to asset light project development, which will keep RoE at a better level of 16.2% in FY28E.
Given the substantial opportunities and growth prospects, the demerger of RRL will unlock significant value for shareholders by allowing the company to pursue sustainable growth with a focused, pure-play real estate strategy. RRL is set to be listed in July 2025, and our FY28 DCF-based price target INR 1,383 per share.
