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Gitanjali Gems Ltd. (GIL), a part of the Gitanjali Group of Companies, was
established in 1986 as a diamond and jewellery manufacturer and retailer at Surat.
Since then it has transformed itself into one of India’s largest and fastest growing
integrated Jewelry and Diamond manufacturing, branded and retailing enterprise. It
has a presence across all aspects of the diamond and jewellery value chain (right
from sourcing, processing and manufacturing, to branding and retailing), and a strong
foothold in the lifestyle space.
Well Diversified Business. The business is divided among two major segments - Diamond and Jewellery. It has forayed
into lifestyle products too for leveraging customer base, domain knowledge and cross selling. It has also diversified in
development of jewelry Special Economic Zone (SEZ) to assist in processing and manufacturing operations. It has got
subsidiaries in Infra-tech business too.
State of the art manufacturing facilities: It has modern facilities at nine locations for diamond processing & manufacturing
of jewelry. The facilities have got highly advanced product development and design capabilities.
Strong Domestic and Global Distribution Network: The well known brand creation and promotion and expansion of its
retail network have been successful in propelling GIL’s business to very high growth rates. GIL has presence in over 200
cities with 3400+ Points of Sale (network of 400 distributors, 2000+ retail outlets, 185 exclusive stores, 215 franchisee
stores). It occupies around 1 mn sq feet retail space in India which it wants to increase to 2 mn sq feet in the next three
years. Around 60% of the organized mall space in India within jewellery category belongs to the Gitanjali Group. Talking
about foreign presence, it has got strategic distribution presence across all top jewelry markets – USA, Japan, China &
Middle East. It has 130 stores in the US.
Valuation: At CMP of ` 303 the stock trades at 7.5x of FY11 and 5.9x FY12 earnings at ` 40.4 and ` 51.1 respectively,
which we feel is attractively priced. On EV/EBITDA basis, the stock currently trades at 8.5x and 6.9x of FY11 and FY12
EBITDA respectively. Accordingly we recommend a “BUY” in GIL with short to medium term view.
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