Rajesh Exports hits 5% lower circuit after Sebi order

Stock locked at lower circuit as selling intensifies

Rajesh Exports shares came under sharp selling pressure after a Sebi interim order triggered fresh concerns around the company’s financial reporting. On Thursday, June 4, the stock hit the day’s low of ₹104.65, which marked its 5% lower price band against the previous close of ₹110.15 per share. Reports also noted the stock falling 4.99% to ₹103.92 on the NSE in early trade. The decline followed Sebi’s interim order dated June 3 against Rajesh Exports and its promoter, Rajesh Mehta. The order alleged large-scale financial misrepresentation, diversion of funds, and non-cooperation during an ongoing investigation.

The immediate market reaction placed focus not only on Rajesh Exports but also on large shareholders such as Life Insurance Corporation of India (LIC). The development also drew attention because the company has a sizable retail investor base. While the order is interim in nature, the restrictions and allegations were sufficient to drive a sharp one-day move that pushed the stock to its lower circuit limit.

What Sebi alleged in its interim order

Sebi’s interim order, running into 109 pages, said its investigation and forensic examination had found prima facie evidence that nearly 97% to 99% of the company’s reported revenue may have been inflated. The regulator described the findings as severe, and the interim order said the reported turnover did not appear to reflect the underlying economic activity. Sebi also highlighted concerns regarding transactions involving certain overseas entities.

Separately, reports quantified the estimated inflated revenue at ₹15.15 trillion, which is ₹15,15,000 crore when expressed in a consistent base unit. Another reference described the issue as linked to a ₹15 lakh crore matter, broadly in the same range. Sebi said it has initiated a detailed examination and directed the company to extend full cooperation to the ongoing probe. It also sought more records and ordered a fresh forensic audit, as reported.

Restrictions on promoter and compliance requirements for the company

As per the order details carried in reports, promoter and chairman Rajesh Mehta has been restrained from buying, selling, or dealing in securities of Rajesh Exports until further orders. The company has also been asked to make true and fair disclosure of its financial statements and related party transactions.

The restraint is temporary and linked to the completion of Sebi’s investigation, based on the coverage. Even so, such interim directions can have immediate market consequences because they raise questions around governance and the reliability of historical disclosures. The next steps will depend on the company’s submissions, further forensic work, and regulatory findings.

LIC and retail investors in focus due to large exposure

The fall has been watched closely because of Rajesh Exports’ shareholder mix. Over the last six years, the number of shareholders increased from 22,472 in March 2020 to 198,796 as of March 2026. Within this base, 194,110 were retail investors, according to the figures cited.

As per the March quarter shareholding pattern for 2026, LIC held 3,18,75,887 shares, or a 10.8% stake. At a share price of ₹104.65, that holding was valued at ₹333.58 crore. Retail investors owned 4,17,32,856 shares, representing a 14.13% stake, valued at ₹436.73 crore at the same price. Together, these two categories were described as facing the risk of losing about ₹770 crore in wealth based on the price decline and exposure figures cited.

No domestic mutual funds hold the stock

Another data point highlighted in coverage was the absence of domestic mutual fund ownership in Rajesh Exports. Reports citing Ace Mutual Fund data said no domestic mutual fund currently owns shares of the company. In contrast, LIC has retained its holding of 10.80% without any change since at least September 2023, based on shareholding disclosures referenced in the reports.

This difference in ownership profile matters because it can shape how the market interprets risk and how liquidity behaves during sharp price moves. With mutual funds absent, the investor base is more concentrated among other institutions and retail investors.

Spillover to LIC stock after the Rajesh Exports move

The impact was not limited to Rajesh Exports. Shares of LIC fell over 1% following the sharp drop in Rajesh Exports after Sebi’s interim order, according to the reports. The linkage stems from LIC’s 10.8% holding, which makes the insurer one of the company’s largest institutional shareholders.

While the percentage move in LIC was smaller than in Rajesh Exports, the reaction underscored how governance concerns in an investee company can quickly become a headline issue for large institutional holders. The market focus, in this case, was on the value of the holding and the uncertainty created by the allegations and ongoing probe.

Stock performance context before the order

Rajesh Exports stock had already been under pressure before the latest development. Coverage noted the stock was down around 40% over the past year. After Sebi’s order, the stock opened nearly 5% lower at around ₹103 on June 5, according to one report.

This context is relevant because a steep prior decline can amplify sensitivity to adverse regulatory actions. It can also shape investor behaviour in the short term, especially when a stock is repeatedly hitting circuit limits where trading becomes constrained.

Key facts at a glance

Why the order matters for investors

The interim order matters because it directly questions the integrity of reported financials, which can affect how investors assess valuation, risk, and corporate governance. Allegations such as revenue inflation on the scale cited in the order can increase uncertainty until there is clarity from the investigation and any subsequent proceedings. The restrictions on the promoter and the directions on disclosures also signal that the regulator considers the issues serious enough to warrant immediate action.

For shareholders, the key near-term watchpoints are the company’s disclosures, cooperation with the investigation, and outcomes of any fresh forensic audit. For institutional investors like LIC and for a large retail base, the sharp price reaction also highlights how quickly wealth exposure can change when a stock is locked in circuit limits.

Conclusion

Rajesh Exports shares hit a 5% lower circuit after Sebi’s interim order alleged significant financial irregularities and prima facie revenue inflation of nearly 97% to 99%. The market reaction has brought LIC’s 10.8% stake and the exposure of nearly 1.94 lakh retail investors into sharper focus. The order remains interim, and the next developments will hinge on the ongoing investigation, additional records sought by Sebi, and outcomes of further forensic examination.