Broker’s call: Raymond Realty (Buy)

Raymond Realty, a real estate firm, is evolving its strategy from a traditional developer to a more asset-light Multi-Merger (MMR) platform. This transformation is backed by a substantial development potential of ₹52,000 crore spread across ₹25,000 crore of land owned in Thane and an additional ₹27,000 crore across eight Joint Development Authorities (JDAs).

The firm's unique selling point lies in its capability to identify and secure mature, execution-ready opportunities, which allows for quicker conversion from signing to launch and enables scalable growth across Mumbai without the need to acquire land. The company's progress towards this strategy has outpaced its projections; the contribution of JDAs to bookings has surged from 22% in FY25 to 54% in FY26 and 64% in Q1FY27, surpassing its 50% target a year ahead of schedule.

The firm believes that Thane serves as the cash engine and the Joint Development Authorities (JDA) act as the growth engine, with the combined portfolio generating annual cash flows of ₹600-750 crore to fuel further expansion. The company forecasts that bookings/collections will grow at a Compound Annual Growth Rate (CAGR) of approximately 24% to 46% between FY26 and FY29, with debt expected to rise from ₹1,010 crore in FY26 to ₹2,010 crore by FY29E, keeping the Debt-to-Equity (D/E) ratio below 1x, its set threshold, before it stabilizes.

Raymond Realty has initiated coverage on the stock with a Buy rating, setting a target price (TP) of ₹879, calculated using a Net Asset Value (NAV) methodology. The valuation considers the value of the development portfolio and the potential of its JDA-led franchise, with an implied embedded Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) ratio of 6.6x for FY29E.

The main risks identified include delays in project launches, increasing competition, and higher debt levels.