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Raymond Share Price Plunges 66%: What Happened?
The Indian stock market witnessed a dramatic event on Wednesday, May 14th, 2025, as Raymond Ltd. shares took a nosedive, plummeting over 66%. This staggering drop, one of the largest single-day declines for a major stock, saw the share price plummet from ₹1,564.30 to ₹523.10. But what caused this seismic shift? Let's delve into the details.
The Demerger Explained
The culprit behind this dramatic fall is a recent corporate restructuring: the demerger of Raymond's real estate arm, Raymond Realty. May 14th was the ex-date for this demerger. This means that the value of Raymond Realty is no longer included in the price of Raymond Ltd. shares. Think of it like separating a company's assets; the real estate portion is now a separate entity, and Raymond Ltd.'s stock price reflects only its remaining businesses.
- What is a demerger? A demerger is when a company separates one of its divisions into a new, independent company. In this case, Raymond separated its real estate business.
- What does this mean for shareholders? Shareholders who held Raymond stock before the ex-date received one share of Raymond Realty for every share of Raymond Ltd. they owned. This means they haven't actually *lost* value; it's simply been redistributed.
Raymond announced its intention to demerge Raymond Realty in July 2024. The National Company Law Tribunal (NCLT) approved the plan in March 2025, with the separation officially taking effect on May 1st, 2025. Raymond Realty is expected to be listed on stock exchanges by the September 2025 quarter.
The initial shock of the 66% drop in Raymond Ltd.’s share price may be partly attributed to some mobile trading apps not immediately reflecting the adjustment for the demerger. The price has since partially recovered.
Raymond Realty's Performance
Despite the dramatic drop in the parent company's stock, Raymond Realty reported strong Q4 FY25 results. The company boasted a booking value of ₹636 crore, driven by projects like The Address by GS 2.0, Invictus, and Park Avenue - High Street Retail in Thane, as well as the JDA project 'The Address by GS' in Bandra. Revenue reached ₹766 crore, a 13% increase year-on-year, with an EBITDA of ₹194 crore and a margin of 25.3%. The demerger also left Raymond Realty with a net cash surplus of ₹399 crore. Gautam Hari Singhania, Chairman and MD of Raymond, described the demerger as a strategic move to enhance shareholder value through a focus on core businesses.
Conclusion: Understanding the Shift
The massive drop in Raymond Ltd.'s share price on May 14th, 2025, wasn't a sign of the company's overall failure but a direct consequence of the Raymond Realty demerger. While the initial price drop was dramatic, shareholders haven't lost value; it's simply been transferred to their holdings in the newly independent Raymond Realty. The long-term implications will depend on the performance of both companies post-demerger. This event highlights the complexities of corporate restructuring and the importance of understanding the nuances of such actions before making investment decisions. Remember to always consult with a financial advisor before making any investment decisions.
Disclaimer: This article provides information regarding recent stock market activity and is not intended as financial advice. Please consult a financial professional before making investment decisions.
