Rajesh Exports shares jump 10% in two days; MCA or SFIO investigation may be next, say sources

Rajesh Exports Share Price: Shares of Rajesh Exports extended their recovery for a second consecutive session on Tuesday, hitting the 5 per cent upper circuit despite fresh reports suggesting the company could face a deeper regulatory probe.

The stock climbed 5 per cent to Rs 84.24 on the NSE, taking its two-day gain to 10.25 per cent. The rally follows a sharp correction that wiped out nearly 30 per cent of the company's market value after a recent interim order by market regulator Sebi over alleged revenue inflation.

Rajesh Exports closed at Rs 76.41 on June 12 after suffering losses for seven consecutive trading sessions. The stock then rose 5 per cent to Rs 80.23 on June 15 before hitting another upper circuit on Tuesday.

Despite the rebound, the stock remains significantly below levels seen before Sebi's action earlier this month.

Heavy volumes accompany rebound

Trading activity surged alongside the recovery.

More than 1.53 million shares changed hands on the NSE on Tuesday, far exceeding the stock's 20-day average trading volume of around 249,172 shares.

Market participants said the sharp rise in volumes indicates aggressive buying interest from investors looking to accumulate the stock after its steep correction.

With a market capitalisation of around Rs 2,490 crore, Rajesh Exports has emerged as one of the most closely watched counters on Dalal Street in recent sessions.

Fresh regulatory concerns emerge

The recovery in the stock comes even as new regulatory concerns surfaced.

According to a Zee Business report citing sources, the Ministry of Corporate Affairs (MCA) may soon order a detailed investigation into the company's affairs. Sources said the ministry's preliminary review has reportedly identified irregularities in the company's functioning.

The report added that the MCA could either expand its own investigation or direct the Serious Fraud Investigation Office (SFIO) to conduct a deeper probe.

Sources further indicated that any investigation could also examine historical customs-related matters and corporate governance complaints involving the company.

Neither Rajesh Exports nor the MCA responded to queries from Zee Business.

Sebi order triggered sell-off

The stock came under intense pressure after Sebi issued an interim order earlier this month.

The regulator said its investigation and forensic review had uncovered prima facie evidence suggesting that 97-99 per cent of the company's reported revenue may have been inflated. Sebi described the findings as "egregious and unheard of."

According to the regulator, the alleged overstatement could exceed Rs 15.15 lakh crore over multiple financial years.

As part of the interim order, Sebi barred promoter Rajesh Mehta from buying, selling or otherwise dealing in securities of the company until further directions. The regulator also instructed Rajesh Exports to cooperate fully with the ongoing investigation.

The action followed a shareholder complaint received by Sebi in March 2024.

Company rejects allegations

Rajesh Exports has strongly disputed Sebi's findings.

In exchange filings, the company said the order was interim in nature and did not represent a final conclusion.

The company maintained that its reported revenues were accurate and that there had been no overstatement of earnings.

Rajesh Exports argued that Sebi's observations stemmed from a misunderstanding involving its Swiss subsidiary, Valcambi.

According to the company, the regulator allegedly considered Valcambi's EBITDA figures instead of revenue figures, leading to what it described as a "communication gap and confusion."

"The consolidated Revenue as stated by the Company is correct," Rajesh Exports said in one of its filings.

The company added that it is in the process of submitting supporting documents and remains confident that Sebi will arrive at the correct conclusion after reviewing the material.

Investors weigh risks and opportunities

The sharp rebound in the stock despite ongoing regulatory scrutiny suggests some investors are betting that the recent sell-off was excessive.

However, analysts cautioned that uncertainty surrounding Sebi's investigation and the possibility of further scrutiny from the MCA or SFIO could keep volatility elevated in the counter in the coming weeks.