01 — At a Glance
The Gold Refiner That Processes 35% of Global Gold But Can’t Refine Its Own Business Model
- 52-Week High / Low₹239 / ₹93.8
- Q3 FY26 Sales₹2,35,098 Cr
- Q3 FY26 PAT₹71.5 Cr
- Q3 FY26 EPS₹2.42
- Annualised EPS₹9.68
- Book Value / Share₹562
- Price to Book0.17x
- Operating Margin0.04%
- Debt / Equity0.05x
- ROCE1.47%
Flash Summary: Rajesh Exports is that friend who says “I’m doing great, business is booming!” while their actual profit margin is 0.04% — basically the financial equivalent of that bhaji vendor who serves you with incredible enthusiasm but can’t actually make money from it. Q3 FY26: ₹2,35,098 crore in sales for ₹71.5 crore profit. That’s 99% material cost and your margin left behind at the chai tapri. Stock down 54% in 3 months. Brickwork Ratings said “issuer not cooperating” — even the auditors have lost patience.
02 — Introduction
The Company That Processes 35% of Global Gold & Still Trades at 0.17x Book Value
Imagine this. You’re told a company processes 35% of the world’s gold. You think: “That’s massive. This must be a fortress.” Then you look at the financials and realise that 99% of their sales value is literally just the cost of the gold they’re processing. It’s like being a master chef who makes 0.04% margin on a biryani. Your skill is incredible. Your business model is a slow-motion car crash.
Rajesh Exports Limited, since 1989, has positioned itself across the entire gold value chain — refining, manufacturing, exporting, and retailing through its SHUBH Jewellers brand. Two refining facilities (Valcambi, Switzerland and Uttarakhand, India) with 2,400 TPA capacity. Three manufacturing facilities (Bangalore, Cochin, Dubai) with 350 TPA capacity. 82 retail showrooms in Karnataka. A design portfolio of 29,000 active designs. On paper? A gold empire. On the balance sheet? A company where the margin is so thin it’s basically theoretical.
Q3 FY26 results show ₹2,35,098 crore in sales, ₹71.5 crore profit, and an operating margin of 0.04%. That 0.04% figure isn’t a typo — it’s a permanent feature of the business. The company has ₹879 crore in debt (relatively low), ₹1,26,986 crore in assets, and a stock price that has collapsed 54% in 3 months, and -50% in 12 months. Brickwork Ratings downgraded to BWR D and marked them as “issuer not cooperating” — which is credit analyst speak for “we’ve given up trying to get information from you.”
The Governance Red Flag: Since Q1 FY24, the company has missed auditor report filings, skipped cash flow statements, and failed to align preliminary financials with final ones for 3 consecutive years. The consolidated subsidiary (REL Singapore Pte Ltd) which contributes 98% to consolidated sales has NOT been audited by the consolidated auditor since FY22. Both BSE and NSE issued warning letters in Nov 2024. SEBI initiated a forensic investigation (Dec 2024). The company received multiple fines, including ₹9.26 lakh from exchanges. This isn’t just sloppy reporting — this is structural corporate governance that makes investors sweat.
03 — Business Model: WTF Do They Even Do?
Refine Gold. Mark It Up 0.04%. Pray. Repeat.
REL operates across four business segments: gold refining, gold jewelry manufacturing, wholesale distribution, and retail through SHUBH Jewellers. The Swiss subsidiary Valcambi produces Valcambi bullion bars supplied to major bullion banks worldwide. The Dubai subsidiary, Bab Al Rayan, refines and distributes gold in the UAE. Domestically, they do white-label manufacturing for leading brands and wholesale distribution.
The business is a pass-through model where material cost (gold itself) comprises 99% of sales. A ₹100 crore gold transaction becomes: ₹99 crore of gold outflow, ₹1 crore of operational costs, and maybe ₹4 lakh in profit. That’s not margin. That’s rounding error. The company’s value proposition isn’t “we add massive value to gold” — it’s “we process gold efficiently and don’t lose much in refining wastage.” Spoiler: their gold wastage is 270 kg/year. On an order book of ₹70,250 crore, that’s actually pretty decent housekeeping. But housekeeping margins don’t build empires.
With 82 SHUBH Jewellers showrooms, the company has tried to capture retail margin, which is thicker. But retail jewelry is capital-intensive, geographically limited (82 showrooms in Karnataka only), and competes against Titan, which has 6,000+ stores across India and 30%+ operating margins. REL’s retail strategy is like bringing a lathi to a bazooka fight.
Refining Capacity2,400 TPAacross both facilities
Manufacturing Capacity350 TPAacross 3 facilities
Retail Showrooms82SHUBH Jewellers in Karnataka
Material Cost %99%of sales, every single quarter
The one bright spot: REL is the government-recognised five-star export house in the jewellery sector. It exports to 60+ countries. The order book stands at ₹70,250 crore. But here’s the thing — a fat order book with 0.04% margins means exponential operational risk. A 0.2% deviation in refining wastage, forex hedging, or working capital management could turn profit into loss. The company is a tightrope walker with no net below.
04 — Financials Overview
Q3 FY26: The Numbers Look Busy. The Margins Look Exhausted.
Result type: Quarterly Results | Q3 FY26 EPS: ₹2.42 | Annualised EPS: ₹2.42 × 4 = ₹9.68 | TTM EPS: ₹5.69
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 2,35,098 | 96,630 | 175,212 | +143% | +34% |
| Operating Profit | 114 | 67 | 176 | +70% | -35% |
| Operating Margin % | 0.04% | 0.07% | 0.10% | -43 bps | -6 bps |
| PAT | 71.5 | 36 | 104 | +101% | -31% |
| EPS (₹) | 2.42 | 1.20 | 3.52 | +102% | -31% |
The Margin Collapse Story: Operating margin went from 0.10% (Q2 FY26) to 0.04% (Q3 FY26). That’s a 6 basis point decline. Let me repeat: SIX BASIS POINTS. For a company dealing with ₹2.35 lakh crore in quarterly sales, even a 2 paise deviation per rupee of gold handled tanks the margins. The revenue grew 143% YoY, but PAT grew only 101%. The business is scaling volume while shrinking profitability — a classic case of “winning deals that lose money.”
💬 If Rajesh Exports processes 35% of global gold, why can’t they negotiate better refining spreads? Is it market structure (spot gold trades too efficiently) or management inefficiency? What’s your take in the comments?
05 — Valuation: The Value Trap Debate
Trading at 0.17x Book. Is It Cheap or Dead?
Method 1: Price to Book Value
Book Value = ₹562 per share. Current Price = ₹94. P/BV = 0.17x. For an industrial business with positive equity, 0.17x is extremely cheap. But cheapness is a symptom, not a reason to buy. Asset-light tech companies trade at 3–5x book. Asset-heavy commodities businesses trade at 0.5–1.5x. A P/BV of 0.17x means the market is pricing in that these assets won’t generate normal returns. Which is true — they generate 0.61% ROE.
→ If ROE normalizes to 3%, implied P/BV = 0.3x
Range: ₹168 – ₹336 (if ROE normalizes)
Method 2: P/E on Normalized Earnings
TTM EPS = ₹5.69. Current P/E = 16.5x. Sector median P/E for jewellery companies is 19.6x. REL’s multiple is at discount, but that’s because its ROE is destructive. If we assume normalized ROE of 5% (still low, but better than 0.61%), implied EPS = ₹28 (using ₹562 book value × 5% ROE). At sector median P/E of 19.6x, fair value = ₹549.
→ Current price assuming 0.61% ROE continues = ₹94
Range: ₹150 – ₹400 (if ROE improves to 2–5%)
Method 3: Sum of Parts (Liquidation Basis)
Total Assets: ₹37,369 crore (Sep 2025). Borrowings: ₹879 crore. Net Asset Value = ₹36,490 crore. Shares outstanding: ~2,95 crore. NAV per share = ₹1,236. But this is gross — it assumes all assets are liquid at book value. Gold inventory, receivables, and WIP are liquid. Fixed assets (refining facilities, retail showrooms) are worth less.
→ Conservative NAV (60% of book) = ₹742 per share
Range: ₹350 – ₹742 (liquidation scenarios)
Consolidated View: Across methods, fair value ranges from ₹150–₹400 in normalization scenarios, to ₹350–₹742 in liquidation/NAV scenarios. The current price of ₹94 is below even the pessimistic scenarios, which could suggest value — except the business is trapped in low-margin, high-volume hell. Turning ₹94 into ₹200+ requires either operational miracle (not visible) or corporate restructuring (possible but risky given governance issues).
⚠️ EduInvesting Fair Value Range: ₹150 – ₹400. This fair value range is for educational purposes only and is not investment advice. Please consult a SEBI-registered investment advisor before making any financial decision.
06 — What’s Cooking: The Governance Disaster
Brickwork Said “Issuer Not Cooperating”. Translation: Run.
