Expect 30-35% growth in revenues this year: Gitanjali Gems

In an interview to CNBC-TV18, Abhishek Gupta, president of Gitanjali Gems says the company has seen a surge of almost 45-50 percent this festive season in diamond jewellery alone.  "Margin will definitely improve because the diamond jewellery has better margins," he adds. He expects 30-35 percent growth in revenues this year.

Below is the edited transcript of his interview with CNBC-TV18’s Gautam Broker and Reema Tendulkar. Q: Is there a significant improvement year-on-year (YoY) in terms of demand? What kind of jewellery is being sold? Most of the jewelers this time, in Q2, have reported a significant pick up in diamond jewellery sales? Is that trend continuing? A: Yes. For Gitanjali, we have already proven diamond jewellery network. We have seen a surge of almost 45-50 percent for this festive season in diamond jewellery alone. Geographic wise, the eastern India and the northern India are the largest areas of demand this time. Q: On the back of the 45 percent sales, which you have seen in this Diwali period, what will you do to your sales in Q3 on the diamond side and even on the margin side? A: Margin will definitely improve because the diamond jewellery has better margins. The, overall, Q3 numbers are yet to be evolved because it is just one-and-a-half months. It will definitely improve the margins and return on capital for the company. Q: Your Q2 margins were close to about 6.2 percent overall on consolidated basis? Where do you see it headed in the next two quarters? A: It should improve. As we are seeing the diamond jewellery trend coming up, we can see 50 bps improvement there. Q: What about demand for gold jewellery? There was a lot of demand resistance because gold was trading at very high levels. In rupee terms, it still is. But are consumers getting along with the fact now that these levels perhaps are here to stay? Is that demand being resilient or is there a weakness on that side? A: Gold prices have stabilised since last four-five months. People have accepted it. They have come up to buy gold jewellery this season. A lot of our customers have seen postponed their buying behaviour. With the stabilisation, they are accepting these prices and buying the volumes. Q: After festive season gets over, are you expecting a lull phase that could be weaker on a year-on-year (YoY) basis or is that normalise trend looking better? A: We are a global company now. We are seeing a strong Diwali and marriage season in India. Thereafter, our international presence in form of Christmas and valentine will pick up. So, it balances our overall performance. But as the month goes by, we will see the other occasions coming up for people to buy jewellery. Q: How are you likely to close up FY13 by way of sales? Would it be about 30-35 percent growth that we could expect in revenues? A: I would say last three years CAGR has been on the similar lines. We can expect similar growth. Q: Any chance of upping your stake in that Japanese company? A: As of now, no.