Rajesh Exports Shares Hit 5% Lower Circuit for Second Day After SEBI Order
Rajesh Exports Ltd (REPL) shares remained locked in the 5% lower circuit for the second consecutive trading day on June 5, 2026, following a strong interim order from the Securities and Exchange Board of India (SEBI). The stock traded around ₹103–104 levels on both BSE and NSE, reflecting significant investor concern over allegations of large-scale financial misrepresentation.
This development has shaken confidence in the gems and jewellery sector and serves as a stark reminder of the importance of corporate governance and transparent financial reporting. In this detailed article, we examine the SEBI order, the allegations, the company’s response, market impact, and what this means for investors going forward.
What Exactly Happened?
On June 3, 2026, SEBI issued a 109-page interim order against Rajesh Exports and its promoter and Executive Chairman, Rajesh Mehta. The regulator cited prima facie evidence of massive revenue inflation amounting to approximately ₹15.15 lakh crore between FY21 and FY25. According to SEBI, nearly 97–99% of the revenues reported through overseas subsidiaries, particularly Valcambi SA in Switzerland, appeared inflated or lacked proper supporting documentation.
SEBI also highlighted concerns over fund routing through personal and related-party accounts, inadequate disclosures, and alleged non-cooperation during the investigation. As an interim measure, the regulator barred Rajesh Mehta from buying, selling, or dealing in the company’s securities until further orders and directed enhanced disclosures and a fresh forensic audit.
Market Reaction: Two Days of Panic Selling
- June 4, 2026: Shares opened at the lower circuit and closed down nearly 5% at around ₹104.65 on BSE and ₹103.92 on NSE.
- June 5, 2026: Continued heavy selling pressure kept the stock locked in the 5% lower circuit for the second day.
This rapid decline has wiped off substantial market value in a short time. With over 194,000 shareholders, including institutional investors like LIC (holding around 10.8%), the fallout has been widespread.
Detailed Allegations in SEBI’s Interim Order
SEBI’s investigation, which reportedly started from a shareholder complaint, uncovered several red flags:
- Revenue Inflation: The company allegedly booked full transaction values of gold refining instead of just margins, leading to massively overstated consolidated revenues.
- Questionable Fund Movements: Funds allegedly routed through layered transactions involving promoter-linked entities and personal accounts without adequate explanations.
- Disclosure Failures: Inadequate reporting on overseas subsidiaries and related-party transactions under LODR regulations.
- Non-Cooperation: Delays in providing complete records, citing foreign laws like Swiss data protection, which SEBI rejected as insufficient justification.
The regulator described the scale of alleged irregularities as “egregious and unheard of.”
Rajesh Exports’ Official Response
The company has strongly denied the allegations. In its clarification, Rajesh Exports stated:
- All revenues declared are correct and based on genuine business transactions.
- The SEBI order is interim and based on preliminary observations.
- There appears to be a “communication gap” with the regulator.
- The company is preparing detailed submissions and will fully cooperate with the investigation and forensic audit.
Chairman Rajesh Mehta has personally asserted that financial disclosures were accurate and that differences arose because SEBI did not fully consider consolidated financials. The company maintains that its core gold refining and jewellery export business remains strong.
Impact on Investors and Stakeholders
- Retail Investors: Many small shareholders are worried about further downside and potential long-term value erosion.
- Institutional Holders: LIC’s stake (valued at around ₹334 crore pre-crash) and FII holdings (around 14.26%) have taken a hit.
- Sector-Wide Effect: Other jewellery and export-oriented stocks may face indirect pressure due to heightened scrutiny on governance standards.
- Broader Market Message: SEBI’s swift action reinforces its focus on protecting investor interests through stricter oversight of financial reporting.
Historical Performance and Company Background
Rajesh Exports has been a prominent name in India’s gems and jewellery industry, known for large-scale gold refining and exports. It benefited from government initiatives like the PLI scheme and strong global demand in previous years. However, this SEBI action has raised questions about the quality of its past growth and financial reporting practices.
Why This Matters for Corporate Governance in 2026
This case highlights SEBI’s increasing vigilance on companies with complex overseas structures. Interim orders like this, while not final convictions, can cause prolonged uncertainty and significant market impact. It serves as a cautionary tale for investors to look beyond headline numbers and scrutinize cash flows, auditor notes, and subsidiary disclosures carefully.
What Happens Next?
- Company Submissions: Rajesh Exports has 30 days to respond fully and provide required documents.
- Forensic Audit: A new detailed audit will be conducted.
- Possible Final Orders: Depending on findings, SEBI may impose penalties, further restrictions, or other enforcement actions.
- Stock Recovery: Any positive clarifications or resolution could help stabilize the stock, but the process may take time.
Analysts recommend investors avoid knee-jerk decisions and wait for more concrete updates from both the company and the regulator.
Lessons for Investors in Volatile Markets
- Diversify your portfolio to reduce single-stock risk.
- Monitor regulatory announcements closely.
- Pay attention to cash flow statements and notes to accounts.
- Exercise caution with stocks facing serious regulatory probes, even if interim.
Poll: What is your view on the Rajesh Exports SEBI case?
- Serious red flags – avoid for now
- Company will clarify and recover
- Too early to judge
- Other (share your thoughts below)
Old vs New Situation: Quick Comparison
| Aspect | Before SEBI Order | After SEBI Order (June 2026) |
|---|---|---|
| Share Price Trend | Relatively stable | Locked in 5% lower circuit (2 days) |
| Promoter Restrictions | None | Rajesh Mehta barred from trading |
| Investor Sentiment | Moderate confidence | High uncertainty and selling pressure |
| Regulatory Scrutiny | Normal | Intense investigation + forensic audit |
Sector and Broader Market Context
The gems and jewellery sector plays a vital role in India’s exports. While this incident is company-specific, it could prompt greater regulatory focus across the industry. Meanwhile, the overall market continues to watch macroeconomic factors like RBI policies and global cues.
Conclusion: Caution and Patience Needed
The back-to-back lower circuit hits in Rajesh Exports shares reflect the market’s harsh reaction to SEBI’s serious allegations of revenue inflation and governance lapses. While the company has denied any wrongdoing and promised full cooperation, the coming weeks and months will be critical as the investigation unfolds.
For investors, this episode underscores the need for thorough due diligence. Regulatory actions can create both risks and, occasionally, buying opportunities once clarity emerges — but timing and verification are everything.
What are your thoughts on this situation? Do you hold Rajesh Exports shares, or are you considering it as a potential dip buy? Share your experiences, questions, or analysis in the comments below. We will continue to monitor and update this developing story as new information becomes available.
Stay informed, invest responsibly, and prioritize long-term financial health in 2026’s dynamic market environment.