Here’s why Raymond shares fell 12% in 7 straight sessions, mcap falls ₹1500 cr

Shares of Raymond shed over 4 percent in intra-day deals on Monday, extending losses for the seventh straight session amid reports that chairman Gautam Hari Singhania's estranged wife Nawaz Gautam Singhania has demanded 75 percent of his fortunes. The couple announced separation earlier this month.

Pranati Deva
Updated22 Nov 2023, 03:59 PM IST
Raymond chairman Gautam Singhania.
Raymond chairman Gautam Singhania.

Shares of Raymond shed 4 percent on Wednesday, extending losses for the seventh straight session amid reports that chairman Gautam Hari Singhania's estranged wife Nawaz Gautam Singhania has demanded 75 percent of his fortunes. The couple announced separation earlier this month.

The stock shed as much as 4.3 percent in intra-day deals on Wednesday. It closed 4 percent lower at 1671.05. Meanwhile, in 7 sessions (November 13-22), it declined to around 12.5 percent.  This led to a loss of almost 1,500 crore in its market cap in the 7 sessions. Its current market cap at the end of today's session stood at 11,124.80 crore.

However, it had gained 13 percent in 2023 YTD and 36 percent in the last 1 year. But in the last 4 years, the stock has rallied almost 6x.

Nawaz Modi Singhania, the estranged wife of billionaire industrialist Gautam Singhania, has come forward with allegations of physical abuse against her husband. In an exclusive interview with India Today, Modi claimed that she and her minor daughter, Niharika, were physically assaulted by Singhania.

Read here: Nawaz Modi Singhania accuses estranged husband Gautam Singhania of assault... alleges 'power and control' were reasons

When approached for comment regarding these allegations, Singhania refused to comment, as per the report. "In the interest of my two beautiful daughters, I would like to maintain my family's dignity and I will refrain from offering any comment. Please respect my privacy," he wrote in an email response, media reports said.

As part of a family settlement after the couple's divorce, 53-year-old Modi has reportedly demanded 75 percent of Singhania's alleged $1.4 billion net worth for herself and her two daughters — Niharika and Nisa.

Singhania has recommended creating a family trust and transferring the family's assets to it, with him serving as the only managing trustee, even though it is thought that he has generally consented to the demand. The terms are reportedly unacceptable to Nawaz Modi Singhania.

Promoters owned a 49.11 percent stake in Raymond as on September 30. At present, Nawaz is a non-executive director at Raymond. Gautam, on the other hand, is Chairman & MD.

Billionaire Gautam Singhania on November 13 announced his separation from his wife Nawaz, saying the two have decided to pursue different paths. Singhania, 58, had married Nawaz Modi, daughter of solicitor Nadar Modi, in 1999.

Read here: Gautam Singhania announces separation from wife

"This Diwali is not going to be the same as many in the past," Singhania, chairman and managing director of textiles-to-real estate conglomerate Raymond Ltd, said in social media posts. "It is my belief that Nawaz and I will pursue different paths from here on."

He had married Nawaz, who was 29-years-old in 1999, after eight years of courtship.

Apart from the marital dispute, the sentiment was also weak as brokerage house ICICI Securities initiated coverage on Raymond with a hold call and a target price of 1,860, implying an upside potential of almost 12 percent. The brokerage highlighted rising input costs, challenging demand environment, and likely increased competition from new players as key risks for the stock.

In a note, ICICI Securities said Raymond's FMCG business’ slump sale, simplification of group structure through potential de-merger of the lifestyle business, doubling the size of engineering business by a foray into sunrise sectors of aerospace, defence and EV through the acquisition of MPPL lifted the stock.

“We believe all these initiatives are steps in the right direction and have been reflected in 6x improvement in the average share price of the company from the low of FY20 to average 2023YTD," it said

It also believes that Raymond has ample scope to become the number two player in this segment. It (the brand) not only enjoys 100 percent consumer awareness in India but has also been one of the leading players in the wedding segment through its suiting fabric business (housed under Branded Textile) over the last nine decades. Positively, the segment enjoys RoCE of over 30 percent and hence could be value accretive. The asset-light (franchise-led) approach towards retail expansion is likely to be FCF positive, it said.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision

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First Published:22 Nov 2023, 03:59 PM IST
Business NewsMarketsStock MarketsHere’s why Raymond shares fell 12% in 7 straight sessions, mcap falls ₹1500 cr

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