Buy Gitanjali Gems; target of Rs 393: Firstcall Research

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Buy Gitanjali Gems; target of Rs 393: Firstcall Research

Firstcall Research is bullish on Gitanjali Gems and has recommendation buy rating on the stock with a target of Rs 393 in its September 24, 2011 research report.

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Firstcall Research is bullish on Gitanjali Gems and has recommendation buy rating on the stock with a target of Rs 393 in its September 24, 2011 research report.

"Gitanjali Group is world's largest branded jewellery retailer. Its headquarter is in Mumbai. Gitanjali Gems, incorporated in 1986, is one of leading players in jewellery segment. Founded in 1966, it was the first group company to engage in cutting and polishing of diamonds in Surat, Gujarat. Today this $900 million multinational group is one of largest manufacturer, retailers and exporters of diamonds. The company is the first to produce the world's smallest heart shaped diamond (0.03 carat) and developing some 25 patented facet patterns. Gitanjali Group's operates from sourcing of rough diamond, cutting, polishing and distributing, to jewellery manufacturing, which includes designing, mould making, wading, casting, spruce grinding, filing, polishing and setting. The company uses latest CAD and CAM processes and equipment for creating designs for jewellery. The company was first to offer diamond studded jewellery at reasonable prices. The company has won over 50 awards from the Ministry of Commerce, India for outstanding exports of diamond and jewellery, is today over $1000 million multinational group, and a publicly listed entity."

"Gitanjali Gems Ltd has posted net profit of Rs 1232.32 million for the quarter ended on June 30, 2011 as against Rs 787.01 million in the same quarter last year, an increase of 56.58%. It has reported net sales of Rs 25953.27 million for the quarter ended on June 30, 2011 as against Rs 18659.07 million in the same quarter last year, a rise of 39.09%. Total income grew by 39.22% to Rs.26002.60 million from Rs.18677.48 million in the same quarter last year. During the quarter, it reported earnings of Rs 14.52 a share. During the quarter, Net sales rose by 39.09% to Rs. 25953.27 million from Rs.18659.07 in the same the quarter last year and the Total Profit for quarter ended June 2011 was Rs.1232.32 million grew by 56.58% from Rs.787.01 million compared to same quarter last year."

"At the current market price of Rs.348.60, the stock is trading at 6.46 x FY12E and 5.41 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.53.97 and Rs.64.46 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 40% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 3.91 x for FY12E and 3.37 x for FY13E. Price to Book Value of the stock is expected to be at 0.99 x and 0.84 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 393 for medium to long term investment," says Firstcall Research report.

Public holding more than 90% in Indian cos

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To read the full report click on the attachment