Buy Gitanjali Gems; target Rs 347: Firstcall Research

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Buy Gitanjali Gems; target Rs 347: Firstcall Research

Firstcall Research is bullish on Gitanjali Gems and has recommended buy rating on the stock with a target price of Rs 347 in its December 28, 2011 research report.

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Firstcall Research is bullish on Gitanjali Gems and has recommended buy rating on the stock with a target price of Rs 347 in its December 28, 2011 research report.

"Gitanjali Gems is one of the largest integrated diamond and jewellery manufacturers and retailers in India. During the quarter ended, the robust growth of Net Profit is increased by 65.25% Rs 1322.46 million. Gitanjali Gems Ltd has acquired 100% stake of 'Crown Aim Limited' ('Crown Aim'). The value of four leading diamond jewellary brands of Gitanjali Gems- Gili, Nakshatra, Asmi and D'Damas rose 84 per cent i.e. Rs 2769 crore in the last two years. Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 46% over 2010 to 2013E respectively."

"The company has posted net profit of Rs 1322.46 million for the quarter ended on September 30, 2011 as against Rs 800.29 million in the same quarter last year, an increase of 65.25%. It has reported net sales of Rs 31676.41 million for the quarter ended on September 30, 2011 as against Rs 25097.10 million in the same quarter last year, a rise of 26.22%. Total income grew by 26.23% to Rs.31701.31 million from Rs.25112.96 million in the same quarter last year. During the quarter, it reported earnings of Rs 15.32 a share."

"At the current market price of Rs 310 the stock is trading at 5.20 x FY12E and 4.25 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs 59.61 and Rs 73.03 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 46% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 3.16 x for FY12E and 2.67 x for FY13E. Price to Book Value of the stock is expected to be at 0.87 x and 0.72 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 347 for Medium to Long term investment," says Firstcall Research report.

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To read the full report click on the attachment