Please Share:: 
India Equity Research Reports, IPO and Stock News
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
History and Business Model
Gitanjali Gems Ltd is one of largest integrated diamond and jewellery
manufacturers and retailers in India. The company is engaged in sourcing of rough
diamonds from primary and secondary suppliers in the international market, cutting
and polishing the rough diamonds for export, manufacturing and selling of
diamonds and other branded and unbranded jewellery. They also manufacturers
and sell diamond and other jewellery through the retail outlets in India.
The company sells their branded jewellery under the name, Nakshatra, Asmi, Gili
and D'Damas. They are having two modern manufacturing facilities located at
Borivali in Mumbai and at the Special Economic Zone in Surat. Further, the
company has two modern jewellery manufacturing facilities at MIDC Andheri,
Mumbai and a facility at the Santacruz Electronic Export Processing Zone in
Mumbai.
Financials
Gitanjali Gems has been growing steady over the years with its net sales and PAT
growing by a CAGR of 28.5% and 37% respectively over FY07-11. Going forward,
the mix will change in favour of high margin jewellery business. Thus EBIDTA is
expected to expand faster in the coming years as focus shifts from low margin
diamond business. The business is characterised by a high working capital owing
to long debtor and inventory days. The situations got worst in due to the current
economic slowdown. However, we expect the inventory situation to improve as the
economic environment improves. Going forward, the management expects top line
to grow 35% in FY12 and EBITDA margins would remain stable.
Growth Drivers
• Retail business to drive growth: Gitanjali expects to increase its retail
presence to 2 million square feet by FY14E, primarily in the domestic outlets
in the next three years. It is expected to grow at 25-30% in the next five years.
• Focus shifting from diamond to jewellery business: Currently jewellery
forms 53% of revenues and balance 47% is diamond. In the coming years,
Gitanjali has planned for increasing contribution from jewellery segment to 65-
70% of total sales of sales by 2014 by consolidating acquisitions and
enhancing rural penetration. Within jewellery, diamond jewellery is 60% of
revenues and 40% is gold jewellery. It is targeting equal mix of gold and
diamond jewellery over next 2-3 years.
• Gitanjali is looking for restructuring its operations for unlocking value. It
has roped in KPMG for the same. It has completed Brand Valuation for nine of
its leading Indian brands. The value of which is pegged at Rs 5584 crores with
Gitanjali, Gili and Nakshatra commanding more than Rs 4200 crores.
• On the Infratech side, the Borivali project is on track for completion in 2013.
The group is expecting additional income of Rs 350 crore as revenues in next
2 years. Besides there are opportunities unlocking from other projects in
Andheri.
Valuations:
At current price of 248, stock is available around 8x its TTM EPS. Historically, there
has been a huge valuation gap between Titan and Gitanjali Gems. With the growth
prospects and restructuring backdrop, we expect the higher multiple for this
company which is one of the leaders in its segment.
Technicals
Gitanjali after making high of Rs 490 in 2008 has hit the floor at Rs 32. The
structural growth in the chart is positive as the current prices are ruling above 61%
Fibonacci retracement level of Rs 308. The zone of Rs 260-300 would be an
accumulating opportunity. The falling volume while moving high is a concern and
hence we suggest accumulating on dips. The sustainability of the mentioned level
would pave way for journey towards all time high levels of Rs 480.
Click link below for complete list and other company details
No comments:
Post a Comment