A premium focused play in MMR…
About the company – Raymond Realty is a part of iconic Raymond Group (founded in 1925 with a woollen mill in Thane). Since entering realty space in 2019, it has become one of the top five premium listed residential developers with a strong presence across the Mumbai Metropolitan Region (MMR). With ~100-acre owned Thane land and 8 Joint Development Agreements, it currently has an estimated gross development value of approximately ₹ 52,000 crore.
Investment Rationale
• Legacy Thane land + JDA venture – twin growth engines : Raymond Realty has scaled its project portfolio from a single project in Thane in 2019 to be among the top 10 listed developers in India and within top 5 listed developers in MMR. Its ~100 acres legacy land in Thane acts as a financial engine, consistently generating annual operating cash flows to fund project launches and future expansions. Its venture in JDA model in 2024 enables it to spread its wings beyond Thane acting as a second growth engine, providing faster scalability with minimal upfront capital requirements and generating higher RoCEs. It has established a portfolio spanning aspirational (Ten X), premium (The Address by GS) and super premium (Invictus by GS) residential projects supported by ~100 acres of owned land in Thane and eight JDA projects.
• Project Portfolio of ~ ₹ 52,000 crore having ~₹ 40,000 crore/ ~₹ 11,800 crore pre-sales/ OCF potential: The company has built an overall project portfolio of ₹ 52,000 crore (Owned – ₹ 25,000 crore, JDAs – ₹ 27,000 crore). It has launched ~₹ 28000 crore (~54% of the overall project portfolio) and sold ~₹ 12,300 crore (~44% of the launched projects). Consequently, it has a robust pre-sales pipeline of ~₹ 40,000 crore uniquely positioning it to capitalise on the structural tailwinds of the MMR realty sector especially in premium and super premium categories. It has an estimated cash inflows (including sold receivables) of almost ₹ 44,000 crore with cash outflows (including JDA share) of ~₹ 29,400+ crore, generating ~₹ 14,400+ crore of project level operational surplus and net operating cash surplus of almost ₹ 11,800 crore.
• Project Portfolio scaled up ~2x within three years capping leverage below 1x D/E: Raymond Realty has expanded aggressively over the trailing three years while maintaining strict financial discipline. It has an internal leverage threshold of 1x D/E. Since FY24, it added 8 JDA projects having ~₹ 27,000 crore GDV, almost doubling its overall project portfolio to ~₹ 52,000 crore. During the same period, its gross debt has increased by ₹ 935 crore to ₹ 1095 crore as on Q1FY27, while keeping D/E below its threshold limit at 0.7x. Currently, the company plans to raise equity which should help balance its rising execution and balance sheet leverage. Its gross debt levels are expected to remain at elevated levels over one-to-two-year period before projects mature and start generating healthy cash flows.
Rating and Target Price:
• We value Raymond Realty on NAV basis, discounting future cash flows for its residential business and factoring future new business development. We initiate coverage on the stock with a Buy rating and NAV based price target of ₹ 700.
