Rajesh Exports Ltd in 2025: High Risk, High Uncertain Rewards...

Introduction: Rajesh Exports Ltd, once a powerhouse in India’s gold industry, has gone through a rocky ride, with its share price crashing ~80% since February 2023 and has given a disappointing five-year CAGR of -20%. 

Interestingly, while India’s Sensex and Nifty have tripled since the COVID slump, this stock has lagged dramatically. 

As of April 10, 2025, with Q3 FY25 (July–September 2024) consolidated financials available, we evaluate whether Rajesh Exports offers a glimmer of hope or remains a cautionary tale for domestic and international investors in 2025.

Potential Upsides:

Debt-Free with Profitability:

Rajesh Exports remains debt-free, a critical advantage in volatile markets. Q3 FY25 reported a quarterly net profit of ₹45.56 crore, up 0.55% from ₹45.31 crore in Q3 FY24. 

Though growth is modest, this profitability—bolstered by no debt—provides a thin buffer against financial distress.

Promoter Commitment:

Promoters hold over 50% of equity, unpledged as of September 2024, signaling belief in a turnaround. This stability might reassure investors seeking signs of insider resolve.

Diversification into High-Growth Sectors:

EV Batteries: A 5 GWh lithium-ion plant in Karnataka under India’s PLI scheme targets the booming EV market.  

Semiconductors: Subsidiary Elest is developing an AMOLED display fab in Telangana via the Semicon India initiative.  

However, execution risks persist—as per media reports a potential ₹1.25 billion penalty looms for missing PLI deadlines—but success could unlock significant upside.

Retail Expansion Potential: 

Shubh Jewellers aims to grow its showroom network and launch an e-commerce platform. 

With Q3 FY25 net sales soaring to ₹66,923.67 crore (up 75.81% from ₹38,065.91 crore in Q3 FY24), the holiday season, followed by recent fall in gold prices are likely to boost gold demand, hinting at retail resilience.

Revenue Surge:

The 75.81% year-on-year sales jump to ₹66,923.67 crore in Q3 FY25 reflects robust topline growth, far outpacing earlier quarters (e.g., ₹603.5 billion in Q1 FY25 standalone). This surge, equivalent to ~$8 billion USD, underscores Rajesh Exports’ scale in the global gold trade.

EBITDA Improvement:

Q3 FY25 EBITDA rose 54.31% to ₹98.22 crore from ₹63.65 crore in Q3 FY24, suggesting operational efficiency gains. While margins remain slim (0.15% of sales), this uptick could signal a stabilizing core.

Key Risks:

Core Business Volatility:

Despite Q3 FY25’s impressive ₹66,923.67 crore in sales, profitability lags. Net profit grew just 0.55% to ₹45.56 crore, and EPS edged up to ₹1.54 from ₹1.53—a razor-thin gain. 

Earlier quarters saw profits crash 90% from FY23 peaks, and high costs (e.g., raw materials historically at ₹1,757.32 crore in Q2 FY25 standalone) continue to squeeze margins. The gold business, while vast, remains low-margin and erratic.

Governance Concerns:  

Corporate governance woes persist—late or flawed filings (audit reports, shareholding data) and a delayed AGM beyond September 30 have dented trust. 

While Q3 FY25 results are now public, earlier delays (e.g., Q3 FY25 data undisclosed until late) highlight ongoing transparency issues.

Unproven Diversification:  

Ventures into EVs and semiconductors lack tangible updates. With no prior expertise in these capital-intensive fields, skepticism abounds about Rajesh Exports’ ability to compete globally. The market views this shift as a risky detour from its gold roots.

Bearish Market Sentiment

The stock closed at ₹182.20 on April 9, 2025 (NSE), down significantly over six months and over twelve months. Its negative ~73% three-year return starkly contrasts with the Nifty Smallcap 100’s +54%. 

A 30% bounce from March 2025 lows offers fleeting hope, but sentiment remains negative without sustained financial or governance fixes.

Profit Margin Fragility:  

Despite ₹66,923.67 crore in sales, Q3 FY25’s ₹45.56 crore profit yields a net margin of just 0.07%. This fragility—coupled with EBITDA of ₹98.22 crore (0.15% of sales)—underscores the challenge of translating revenue into meaningful returns.

Penalty Risks: 

The potential ₹1.25 billion PLI scheme penalty for missed deadlines adds financial and reputational strain. If enforced, it could wipe out over two years of Q3-level profits, amplifying downside risk.

The Verdict: A Speculative Play in 2025:

Pros: A debt-free balance sheet, promoter backing, and diversification into EVs/semiconductors offer faint optimism. 

Q3 FY25’s ₹66,923.67 crore sales (up 75.81%) and ₹98.22 crore EBITDA (up 54.31%) signal resilience, while retail expansion taps India’s gold appetite.  

Cons: Razor-thin margins (0.07% net), governance lapses, and unproven ventures overshadow gains. The stock’s -20% five-year CAGR and -35.51% one-year return reflect deep challenges.

Bottom Line: At ₹182.20—below its ₹516 book value—Rajesh Exports might lure risk-tolerant investors betting on a rebound. It might also give multiple benefits going forward, but the proposition is dicey.

Q3 FY25’s revenue surge is encouraging, but stagnant profits and persistent risks make it a speculative gamble. 

For international portfolios, caution is warranted unless governance improves and diversification bears fruit in 2025.