Raymond LtdQ2 FY24
Raymond Ltd Q2 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹592P/E: 11.1Market Cap: ₹3.0K CrSector: Industrial Manufacturing
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
Yes
Order
Yes
Capex
Yes
3 of 5 growth signals are positive.
Full analysisRevenue guidance
Category 3- →Real estate business expects revenue potential of INR32,000 crores over 7-8 years, including Thane land (INR25,000 crores) and four JDAs (INR7,000 crores).
- →Annual real estate revenue potential estimated at INR3,500-4,000 crores, with price increases expected over the next 7-8 years.
- →Real estate sales strong with 65% inventory sold in Thane and rapid sales in Bandra (100 apartments in 30 days).
- →Engineering business aims to double revenue from current INR1,800 crores over next 4-5 years, driven by aerospace, defense, auto components, and consumables segments.
- →Aerospace-defense segment growing rapidly at 25%-30% year-on-year.
- →Continued expansion through new projects in real estate and capacity additions in engineering machining.
- →Robust order book and positive outlook in aerospace and defense sectors supporting faster growth and improved margins.
Margin guidance
Category 3- →Engineering business is expected to double revenues over the next 4-5 years, driven by aerospace, defense, auto components, and engineering consumables (Page 6).
- →Aerospace and defense segment is growing rapidly at 25%-30% year-on-year with higher margins, enabling faster EBITDA growth (Page 6).
- →Engineering business currently has a run rate of INR300 crores with 25%-27% EBITDA margin; expects significant growth in 2-3 years (Page 18, Page 15).
- →Real estate business (including Thane land and JDA projects) has potential revenues of INR32,000 crores over 7-8 years with 24%-25% EBITDA margin and 25% IRR (Page 8, Page 12).
- →Real estate projected to generate INR4,000 crores annual revenue in 3-5 years (Page 8).
- →Lifestyle business will operate as a debt-free entity with clear segment reporting improving financial clarity (Page 14).
- →Overall, strategic initiatives and demergers aim to unlock significant shareholder value and improve operational focus (Page 4).
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Fundraise plans
Yes- →Currently, no significant capital raising is expected for at least the next two years due to strong cash flow visibility from existing projects and adequate cash reserves (INR500+ crores).
- →The real estate business is focusing predominantly on Joint Development Agreements (JDA), which are asset-light and require limited upfront investment.
- →Peak investment per project is typically INR300-350 crores, which gets replenished as projects launch and progress.
- →The company prefers to have sufficient cash surplus to meet exigencies and avoid project delays.
- →While project debt is a possibility for certain costs, the company emphasizes securing all approvals upfront to avoid stopping projects mid-way.
- →Equity fundraising or debt raising may be considered in the future if the business scale or market conditions require, but no immediate plans have been indicated.
Order book
Yes- →The overall engineering business is currently in the range of INR1,800 to INR1,900 crores in turnover.
- →The engineering segment includes aerospace-defense (growing at 25%-30% YoY), auto components (INR1,200 crores, growing at 10%-15%), and engineering consumables (INR500 crores, growing at 8%-12%).
- →No specific outstanding order book numbers mentioned, but the business has good visibility.
- →Aerospace-defense and auto segments show strong growth potential, expected to double revenues in 4-5 years.
- →Real estate has a strong revenue potential pipeline with INR32,000 crores GDV spread over 7-8 years, INR7,000 crores JDA projects recently signed.
- →Real estate pre-sales stand at INR2,300 crores with 6 million sq. ft. under construction.
- →Focus is on JDA models for real estate with careful project evaluation to ensure 25% IRR target.
Capex plans
Yes- →Future growth in real estate will be predominantly through asset-light Joint Development Agreements (JDAs); minimal outright land purchases expected unless very attractive opportunities arise.
- →Peak investment for a typical INR2,000 crore project is estimated at INR300-350 crores, utilized productively in ongoing and upcoming projects.
- →Real estate business currently has cash of ~INR500 crores supporting its journey with no significant capital raising expected in the next two years.
- →Engineering business aims to add capacity incrementally with smaller capex to double revenues over the next five years, focusing on higher-value aerospace and defense components and assemblies.
- →Aerospace and defense subsidiary demerger expected by March 31, 2025, facilitating focused investment and growth.
- →No plan for JK Files IPO; engineering business consolidating via demergers under Raymond Limited to streamline investments.
- →Overall capex focused on operational efficiency, product mix enhancement, and expanding engineering capacity with innovation.
How does Raymond Ltd rank vs peers in Industrial Manufacturing?
Pro feature1Raymond Ltd
Rev 3Mar 3
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