Porinju Veliyath’s tweet that delivered 6x returns for investors

Raymond Lifestyle, the fashion and retail arm of Raymond Group, debuted on the exchanges on September 5, after its demerger from Raymond Ltd, listing at ₹3,000 per share. This opening price valued the company at ₹18,300 crore, pushing the combined market capitalisation of the two Raymond group companies past ₹30,000 crore. Raymond has been a remarkable wealth creator for shareholders and while it was an out-of-favour stock among investors a few years ago, renowned investor Porinju Veliyath spotted the opportunity early on and alerted investors. 

The valuation mismatch

In February 2022, amid the wave of highly-priced initial public offerings (IPOs), one listing stood out to Mr Veliyath: Vedant Fashions, the parent company of Manyavar. He was astonished that the market valued the company at ₹23,000 crore, despite generating only ₹800 crore in revenue.

Manyavar (listed today):
Rev ~800 Cr Mkt Cap 23000 Cr
Raymond:
Rev ~5600 Cr Mkt Cap ~ 5000 Cr

What am I missing, other than the perception about promoter?

Disc: Holding Raymond

— Porinju Veliyath (@porinju) February 16, 2022

In contrast, Raymond Ltd—a nearly century-old company with a substantial land bank in Maharashtra—had a market cap of just ₹5,000 crore, despite earning ₹5,600 crore in revenue. Mr Veliyath, who had been accumulating Raymond shares for his portfolio management clients, took to Twitter to alert his million-plus followers of this stark valuation mismatch, calling attention to the deep value in Raymond.

A tweet that led to mutlibagger gains

Mr Veliyath's tweet turned out to be prophetic. Raymond’s stock steadily appreciated, rewarding investors with multibagger returns. Those who acted on his call and invested in Raymond are now sitting on 6x returns. To put this in perspective, an investment of ₹1 lakh in Raymond at the time of his tweet would now be worth over ₹6 lakh. Wth the recent demerger of Raymond Lifestyle, investors now own shares in two companies, further enhancing their portfolio value.

The combined market capitalisation of the two Raymond companies now stands on par with Manyavar’s, which also hovers around ₹30,000 crore—validating Mr Veliyath's original assessment of Raymond's deep value compared to Manyavar.

The moral of the story is this: While independent research is essential when investing in equities, you should always keep your eyes and ears open because you never know where an idea can come from.