Gitanjali Gems - Rs.114.00

Establised in 1966, Gitanjali Gems Ltd (GGL) is one of the earliest diamond houses in India. Having received over 50 national and Export Council awards for outstanding exports, it is one of the largest diamond exporting companies in India. It is among the very few integrated players operating right from sourcing of rough diamonds to cutting and polishing them, also manufacturing gold and diamond jewellery and finally branding, marketing and selling through retail operations in India as well as international markets. GGL exports a significant part of its production to various international markets in Europe, including to Antwerp and Italy, USA, Middle East, Japan, China, Hong Kong and Thailand. GGL is the only company, which retails some of the reputed brands like Gili, Nakshatra, Asmi and D'Damas thru its arms and associates Gili was the first branded jewellery introduced in India.

GGL has two modern diamond manufacturing facilities located at Borivali in Mumbai and at the Special Economic Zone at Surat in Gujarat. It also has a large sophisticated jewellery designing and manufacturing facility at the SEEPZ and two jewellery manufacturing facilities at MIDC all in Andheri, Mumbai. For branded jewellery, GGL has established a large retail setup, which includes 26 exclusive distributors across India with around 620 outlets including those in host stores, five standalone stores and 17 franchisee stores in 30 cities and towns in India. Couple of months back, it also formed a joint venture with Sanghvi Exports to manufacture and market SANGINI brand of diamond jewellery. Recently, GGL entered into an agreement with the Government of Andhra Pradesh to develop a special economic zone spread across 200 acres in Hyderabad exclusively for the gems & jewellery industry. For its future growth, the company is expanding its production capacity by setting up additional diamond and jewellery manufacturing facilities in Mumbai and in the proposed Gems and Jewellery Special Economic Zone (‘GJSEZ’) in Hyderabad. To increase its retail share, it is setting up another 10 Asmi retail outlets, 100 D'damas stores, 90 kiosks at Shoppers Stop stores, 6 Nakshatra flagship stores and 25 outlets for Fantasy Diamonds - its subsidiary company. It will soon launch a new collection of international brand called ‘Desire’, which would include real and costume jewellery, watches and accessories from some of the biggest brands in the world.

In February this year, GGL raised around Rs.330 cr. through an IPO of Rs.1.70 cr. shares at Rs.195 per share to invest in its subsidiaries/ associate companies expand its manufacturing capacities and penetrate the retail market besides the development of the SEZ near Hyderabad. For FY06, it recorded 20% rise in top-line to Rs.1621 cr. but its net profit zoomed by 450% to Rs.48 cr. on the back of better operating margins. This led to an EPS of Rs.8 on an equity of Rs.59 cr. Considering its focus on jewellery business and retail expansion, it is estimated to report a turnover of Rs.2000 cr. and net profit of Rs.70 cr. for FY07. This will translate to an EPS of Rs.12 and at a reasonable discounting of 18 - 22 times; it should trade in the range of Rs.220-260. Investors are strongly recommended to buy and hold for at least 15-18 months.