Stock Drops Over 2% as Market Reacts to Pledge Creation by Promoter Entity
Raymond Limited shares fell over 2% on Tuesday, March 11, after the company disclosed in an exchange filing that one of its promoter entities had pledged nearly 1% of its equity holdings as collateral. This move has triggered investor concerns, leading to downward pressure on the stock price.
At 2:45 PM IST, Raymond shares were trading at ₹1,262.55 per share, down 1.53% from the previous day’s closing price. Earlier in the session, the stock had dipped by more than 2% before recovering slightly.
Promoter Pledge Details
According to the exchange filing, J.K. Investors (Bombay) Limited, a promoter entity of Raymond, has pledged 0.98% of its equity stake in the company. As of December 2024, J.K. Investors (Bombay) Limited held a 29.83% stake in Raymond, indicating that the pledge accounts for a small but notable portion of the promoter’s total shareholding.
Pledging of shares by promoters is often viewed cautiously by investors, as it can signal potential liquidity concerns or fundraising needs. However, the company has not provided further clarification regarding the purpose of the pledge.
Financial Performance: Net Profit Declines Sharply in Q3 FY2025
The stock movement comes on the heels of Raymond’s third-quarter (Q3 FY2025) financial results, which showed a sharp decline in profitability despite strong revenue growth.
- Net Profit: ₹72.3 crore, down 61% year-on-year (YoY) from ₹185.4 crore in Q3 FY2024. The steep fall in net profit is attributed to the impact of the demerger of the company’s lifestyle business, which contributed significantly to the base quarter’s earnings.
- Revenue from Operations: ₹953.9 crore, up 40.6% YoY, compared to ₹678.5 crore in the same quarter last year.
- EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization): ₹138 crore, a 75.3% increase YoY from ₹78.8 crore in Q3 FY2024.
- EBITDA Margin: 14.5%, up from 11.6% in the year-ago quarter.
Stock Performance and Investor Sentiment
Raymond’s stock has been volatile in recent months, reflecting investor concerns over business restructuring, earnings volatility, and now the recent pledge by its promoter group. Despite a strong revenue growth trajectory, the company has been facing challenges in maintaining profit margins post the lifestyle business demerger.
Additionally, promoter share pledging is typically considered a red flag by investors, as it can indicate potential financial stress or capital requirements. However, given the limited size of the pledged stake relative to the overall promoter holding, it remains to be seen whether this will have a long-term impact on investor confidence.
Market experts suggest that Raymond’s future performance will depend on factors such as demand recovery in the textile and apparel sector, business restructuring benefits, and promoter actions regarding pledged shares.
The stock remains closely watched by investors, with further updates on the pledged shares and business outlook expected to influence near-term price movements.
