Why did Raymond shares drop 66% from ₹1,500 apiece to ₹500 in a day?

Raymond shares slipped to its 52-week low at ₹530 per share from Tuesday's close of ₹1,561.3 per share, due to demerger. The stock fell 66 per cent in trade as it turned ex-date for the spin-off of Raymond's real estate business -- Raymond Realty. 

 

The ex-date for a demerger is the date on which shares of the parent company start trading without the right to receive shares of the demerged (spun-off) company.

  However, around 11:30 AM, Raymond shares hit 5 per cent upper circuit at ₹556.45 per share on the BSE. In comparison, the BSE Sensex was up 0.39 per cent at 81,462.23. The market capitalisation of the company stood at ₹3,704.5 crore. The 52-week high of the stock was at ₹3,493 per share.

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Raymond's real estate business demerger

In July, Raymond proposed to demerge its realty business to unlock the value for shareholders and harness growth potential in the Indian property market.

 

Through an exchange filing, the company informed that its board has approved the scheme of arrangement of Raymond Ltd and Raymond Realty Ltd and their respective shareholders.

 

The company also plans to list both companies as separate entities on bourses.

 

Raymond received a no objection certificate (NOC) from the BSE and the National Stock Exchange (NSE) for the demerger of its real estate business, according to the company’s stock exchange filing on November 21, 2024.

 

After the demerger, the new company, Raymond Realty (RRL), will be listed on both the stock exchanges after obtaining the necessary approvals.  ALSO READ | Defence stock surges 26% in 1 wk, zooms 100% from March low; hits new high

 

Raymond Realty will issue over 67 million equity shares having a face value of ₹10 each to the equity shareholders of Raymond, after the demerger. According to the company’s stock exchange filing, “Further, upon allotment of equity shares by Raymond Realty, the entire pre-scheme paid-up share capital of Raymond Realty held by Raymond shall stand cancelled, and the paid-up share capital of Raymond Realty to that effect shall stand cancelled and reduced, without any consideration.”