Raymond: Auto and defence are the new growth engines, says Nirmal Bang

Raymond Ltd, historically renowned for its textile and apparel ventures, is now pivoting entirely towards its engineering capabilities. This shift was highlighted during a recent virtual investor conference hosted by Nirmal Bang Institutional Equities, where key executives of Raymond Ltd shared insights into the company's strategic direction and future prospects.

Nirmal Bang said Raymond Limited has made a decisive shift, exiting its lifestyle and real estate ventures to focus entirely on its high-potential engineering businesses. This transition is marked by the establishment of two primary arms: JK Maini Precision Technology Ltd and JK Maini Global Aerospace Ltd, each targeting sectors poised for growth.

In the realm of aerospace and defence, Raymond Ltd has formed strategic partnerships with industry titans such as Pratt & Whitney and Safran. The company also engages with key players like Airbus, HAL, and GE’s programs. This diversification aims to mitigate the inherent cyclicality of aerospace margins, which fluctuate due to complex alloys and product mixes.

A notable aspect of Raymond's engineering strategy is its auto components division. Auto and defence are the new growth engines, the brokerage said, signalling a robust focus on mid-volume, high-precision niches. Raymond's expansion into the EV and hybrid segments, including three-wheeler transmissions and commercial vehicles, is anticipated to drive growth and synergies.

The company benefits from strong export relationships in Europe and Mexico and maintains a leadership position in the hybrid market. This positions Raymond Ltd favourably amid the global transition towards hybrid vehicles and aligns with India’s local sourcing initiatives. Notably, the company's exposure to US tariffs is limited as most sales are processed through Mexico.

Over the next three to six months, Raymond Ltd plans to consolidate its recent integrations to unlock efficiencies. This process, supported by SAP-driven improvements, aligns with the company's medium-term goals of achieving a 15 per cent revenue CAGR and a 20 per cent EBITDA CAGR, ensuring resilience across the automotive, aerospace, and industrial sectors.

Raymond Ltd's historical evolution from a woolen mill in Thane to a leader in textile and apparel, and now to an engineering-focused entity, underscores its strategic adaptability. The company's demerger of its lifestyle and real estate arms has streamlined its operations, concentrating on steel files, auto and EV components, and aerospace and defence.

The successful demerger of its real estate arm, Raymond Realty Ltd, which is now a debt-free entity, further exemplifies the company's strategic realignment. As Raymond Ltd progresses with its specialised verticals, it aims to drive scale and long-term growth within its engineering operations.