View
4
Download
0
Category
Preview:
Citation preview
1
SYNOPSIS
Shree Ganesh Jewellery House Ltd. is a company with a turnover of US$ 1.28 Billion. It exports its products primarily to the U.A.E., Singapore, and Hong Kong.
The Company has declared a final dividend of Rs.3 per share for the FY 2011.
During the quarter company’s manufacturing unit at Mondalpara, West Bengal has commenced commercial production.
During the year the Company added 13 retail / wholesale stores taking the total number to 20 stores across India.
As on 31, March 2011 the Current order book size stands at Rs. 50,000 million.
Net Sales and PAT of the company are expected to grow at a CAGR of 32% and 28% over 2010 to 2013E respectively.
Years Net sales EBITDA Net Profit EPS P/E
FY 11 52543.00 3429.80 2638.50 43.48 5.98
FY 12E 60424.45 4146.09 3063.43 50.49 5.15
FY 13E 68279.63 4682.11 3493.15 57.57 4.51
Stock Data:
Sector: Jewellery
Face Value Rs. 10.00
52 wk. High/Low (Rs.) 286.00/113.05
Volume (2 wk. Avg.) 80000
BSE Code 533180
Market Cap (Rs in mn) 15770.73
Share Holding Pattern
1 Year Comparative Graph
SGJHL BSE SENSEX
C.M.P: Rs. 259.90 Target Price: Rs. 294.00 Date: July 9th 2011 BUY
SHREE GANESH JEWELLERY HOUSE LTD
Result Update: Q4 FY 11
2
Peer Group Comparison
Name of the company CMP(Rs.) Market
Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)
Shree Ganesh Jewellery 259.90 15770.73 43.48 6.00 1.95 20.00
Rajesh Exports 104.70 31002.30 8.40 12.50 2.22 100.00
Gitanjali Gems 302.70 25690.60 26.46 11.44 1.14 20.00
Suraj Diamond 48.30 3228.60 16.71 2.89 0.34 12.50
*As on 09/07/2011
Investment Highlights
Q4 FY11 Results Update
During the quarter, the company disclosed a standalone profit of Rs. 476.20
million as against of Rs.499.45 million for the quarter ended March 31, 2010. Net
sales are increased by 27% to Rs. 11075.30 million from Rs. 8708.24 million in the
same quarter previous year. In the same period, standalone total income of the
company was at Rs. 11082.00 million, a rise of 27% over the prior year period.
Company EPS is stood at Rs.7.85 for the quarter ended March 2011.
Quarterly Results - standalone (Rs in mn)
As At Mar-11 Mar-10 %change
Net sales 11075.30 8708.24 27
Net profit 476.20 499.45 (5)
Basic EPS 7.85 10.29 (24)
4
Declaration of Dividend
The Company has declared a final dividend of Rs. 3 per equity share of Rs.10
for the year ended March 31, 2011.
Company Profile
Shree Ganesh Jewellery House Ltd. is a company with a turnover of US$ 1.28 Billion
and is a 4 star export house (Govt. of India recognized). The company is one of the
largest manufacturer and exporter of hallmarked and handcrafted gold jewellery from
India and the shares of the company are listed in Bombay Stock Exchange and
National Stock Exchange.
The Company is headquartered in Kolkata, with subsidiary offices in Hyderabad,
Chennai, Bangalore, and Delhi. The group is into manufacturing of gold, diamonds
and gemstone studded jewellery.
Shree Ganesh Jewellery House Ltd. is one of the largest manufacturer and exporter of
handcrafted gold Jewellery in India, exporting primarily to countries such as U.A.E.,
Singapore, and Hong Kong. The products portfolio includes handcrafted and
hallmarked gold jewellery, gold enameled jewellery and gold jewellery studded with
precious stones. The products, designed by a team of highly creative designers, have
presence across different price points to cater to all customers across high-end, mid-
market and value market segments allowing the Company to build a large and diverse
portfolio of designs.
The Company has manufacturing units located in Mondalpara, Manikanchan SEZ
which is presently the only jewellery SEZ in West Bengal and Domjur (upcoming). As
of March 31, 2011, the Company has 20 retail outlets and it intends to open forty
nine retail outlets across India including outlets under the shop-in-shop and
franchisee models.
5
Products
� Gold- Plain Jewellery
� Gold Antique Jewellery
� Diamond Jewellery
� Kundan Jewellery
� Polki Chakri
� Ruby-Emerald Jewellery
� Light Weight Italian Jewellery
Brand & Collections
Gaja Gold
Gold Bridals
Gold Elements
Marigold
Sittare
You
Distar
GM Gold
These are some of the brand collections of GAJA.
The company was assigned 'SE1A' rating by CRISIL for SMEs in November 2008 which
indicates 'Highest performance capacity and highest financial strength'.
6
Financials Results 12 Months Ended Profit & Loss Account (Standalone)
Value(Rs.in.mn) FY10 FY11 FY12E FY13E
Description 12m 12m 12m 12m
Net Sales 29558.38 52543.00 60424.45 68279.63
Other Income 3.86 36.50 37.23 39.09
Total Income 29562.24 52579.50 60461.68 68318.72
Expenditure -27482.23 -49149.70 -56315.59 -63636.61
Operating Profit 2080.01 3429.80 4146.09 4682.11
Interest -313.95 -709.40 -962.01 -1050.52
Gross profit 1766.06 2720.40 3184.08 3631.59
Depreciation -23.20 -59.80 -89.70 -103.16
Profit Before Tax 1742.86 2660.60 3094.38 3528.43
Tax -59.87 -22.10 -30.94 -35.28
Net Profit 1682.99 2638.50 3063.43 3493.15
Equity capital 485.46 606.80 606.80 606.80
Reserves 4881.10 7519.60 10583.03 14076.18
Face Value 10.00 10.00 10.00 10.00
Total No. of Shares 48.55 60.68 60.68 60.68
EPS 34.67 43.48 50.49 57.57
7
Quarterly Ended Profit & Loss Account (Standalone)
Value(Rs.in.mn) 30-Sep-10 31-Dec-10 31-Mar-11 30-Jun-11E
Description 3m 3m 3m 3m
Net sales 17891.40 11194.80 11075.30 12736.60
Other income 10.70 7.10 6.70 6.30
Total Income 17902.10 11201.90 11082.00 12742.89
Expenditure -16900.70 -10331.90 -10307.60 -11895.98
Operating profit 1001.40 870.00 774.40 846.91
Interest -150.30 -169.20 -262.80 -289.08
Gross profit 851.10 700.80 511.60 557.83
Depreciation -7.50 -13.70 -31.80 -33.71
Profit Before Tax 843.60 687.10 479.80 524.13
Tax -1.50 -4.20 -3.60 -10.48
Net Profit 842.10 682.90 476.20 513.64
Equity capital 606.80 606.80 606.80 606.80
Face Value 10.00 10.00 10.00 10.00
Total No. of Shares 60.68 60.68 60.68 60.68
EPS 13.88 11.25 7.85 8.46
8
Key Ratio
Particulars FY10 FY11 FY12 E FY13 E
EBIDTA % 7% 7% 7% 7%
PAT % 6% 5% 5% 5%
P/E ratio (x) 7.50 5.98 5.15 4.51
ROE - % 31% 32% 27% 24%
ROCE - % 23% 29% 27% 24%
EV/EBIDITA (x) 6.07 4.60 4.26 4.21
Debt Equity Ratio 0.65 0.45 0.34 0.28
Book Value (Rs.) 110.55 133.92 184.41 241.97
Price/Book Value 2.35 1.94 1.41 1.07
Charts:
• Net sales & PAT
10
• EV/EBITDA(X)
Outlook and Conclusion
At the current market price of Rs.259.90, the stock is trading at 5.15 x FY12E
and 4.51 x FY13E respectively.
Earning per share (EPS) of the company for the earnings for FY12E and FY13E
is seen at Rs.50.49 and Rs.57.57 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 32% and
28% over 2010 to 2013E respectively.
On the basis of EV/EBITDA, the stock trades at 4.26 x for FY12E and 4.21 x for
FY13E.
Price to Book Value of the stock is expected to be at 1.41 x and 1.07 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.294.00 for Medium to Long term investment.
11
Industry Overview
Gems and Jewellery
Gems and Jewellery form an integral part of Indian tradition. A legacy passed from one
generation to another. The components of jewellery include not only traditional gold
but also diamond, platinum accompanied by a variety of precious and semi-precious
stones.
The Indian gems and jewellery market is set to cross US$ 26 billion by 2012, on the
back of improving lifestyle and availability of skilled labour, as per a report ‘Indian
Gems and Jewellery Market – Future Prospects to 2011’, by RNCOS.
India, the largest consumer and importer of gold in the world, is projected to import
around 500-550 tonnes of gold in 2010, as per AnjaniSinha, head of the Indian
Bullion Market Association (IBMA).
As per the credit rating agency Crisil, the diamond industry in India is predicted to
remain stable during 2010-11 due to improved prices and steady demand.
The Gem and Jewellery Export Promotion Council (GJEPC) predicts that the gems and
jewellery exports would witness a rise of around 5 per cent year-on-year during FY11.
Industry Structure
Although, the market is highly dominated by the unorganised players, with increase in
consumer income and economic prosperity, the future of organised retail in India is
very bright. The braded jewellery sector is estimated to reach US$ 2.2 billion by 2010
on the back of quality consciousness among target consumers, as per a McKinsey
report.
The Gem and Jewellery Export Promotion Council's (GJEPC) performance figures for
the financial year 2009-10 showcased the true resilience of the Indian industry over
12
the last year whence it continued with its consistent plans of building trading relations
and penetrating newer markets.
In its bid to enhance the market strategy, a gems and jewellery special economic zone
(SEZ) sprawling over 40 acres with an investment of US$ 441.1 million is being
planned to be set up by Gold Souk, the jewellery mall developer. The company plans to
have residential apartments named Gold Souk City, apart from having gems and
jewellery manufacturers from Thailand and Dubai who will open their units in India.
Total net imports of gems and jewellery in April 2009- June 2010, touched US$ 81.08
billion (provisional figures) as compared to US$ 56.43 billion posed in the
corresponding period in the previous year, according to GJEPC.
Gold
India is one of the largest bullion markets in the world. It has been until now, the
undisputed single-largest Gold bullion consumer.
Gold imports stood at 739 tonnes during April 2009-March 2010. According to
SanjivBatra, Chairman and Managing Director, MMTC Ltd - the country's top gold
importer, stated that the company is likely to import 200 tonnes of the precious metal
in the current fiscal year.
The net imports of gold bars during April-June 2010 was estimated at US$ 11.36
billion (provisional), ascompared to US$ 16.66 billion the first quarter of last fiscal.
In the world official gold holdings ratings, India stood at 11th position with 557.7
tonnes of gold reserve as of June 2010, as per the World Gold Council.
India is the largest consumer of gold jewellery in the world, accounting for about 20
per cent of global gold consumption.
According to a release by the World Gold Council, during the first quarter of 2010
(Jan-Mar) India was ranked as the strongest performing market on the back of
increase in consumer demand. The country registered an increase of 698 per cent to
193.5 tonnes.
13
Diamond
India is the world's largest diamond cutting and polishing centre in the world.
Surat is India's diamond processing hub, contributing over 80 per cent of the
country's diamond processing industry with annual revenue of around US$ 13.03
billion.
India is the world's largest diamond cutting and polishing centre in the world. It
accounts for 60 per cent value share, 82 per cent by carats and 95 per cent share of
the world market by number of pieces.It is the third largest consumer of polished
diamonds after the US and Japan.
Platinum
Due to the increasing gold prices, platinum jewellery has gained momentum in the
past few years not only worldwide but also in India. As per the Platinum Guild
International (India), the number of outlets selling platinum jewellery increased from
12 in 2000-01 to over 300 currently. It is predicted that the number of outlets selling
platinum jewellery would increase to around 1,000 outlets in the next 2-3 years. Most
platinum jewellery manufacturers are targettingconsumers in the age group 20-40
years with high disposable income.
Costume Jewellery
The Indian costume jewellery market is also witnessing growth in the international
market, as per the Export Promotion Council for Handicrafts. The industry body
further stated that the Government is also working towards formulating an
international compliance code for manufacturing costume jewellery.
The currentglobal costume jewellery and accessories market is estimated at US$ 16.3
billion, of which India only exports around US$ 53 million, thereby, providing a huge
opportunity area for the Indian costume manufacturers.
14
Exports
Exports rose to US$ 8.89 billion during April-June 2010 from US$ 5.3 billion in the
corresponding period last year, registering 67.6 per cent growth in the total gem and
jewellery exports, as per data released by the Gem and Jewellery Export Promotion
Council (GJEPC).
The figures for export of gold jewelleryin June 2010stood at US$ 610.40 million
representing a growth of 39.6per cent as compared to US$ 437.24 million in June
2009.
The export of coloured gemstones stood at US$ 60.88 million reflecting a growth of
5.22 per cent in April-June 2010 as compared to US$ 57.86 million during the same
period last year. During June 2010, US$ 23.94 million worth of coloured gemstones
were exported.
The rough diamond exports stood at US$ 247.94 million whereas the cut and polished
diamond exports posted a growth of 85.37 per cent with US$ 5.9 billion worth of
exportsduring the first quarter of 2010-11. In June 2010 itself, cut and polished
diamond exports stood at US$ 2.2 billion.
Government Initiatives
In order to open a new avenue for the bullion trader community with improved trading
practices and increased delivery centres, the recent strategic tie-up between Bombay
Bullion Association (BBA) and Indian Commodity Exchange Ltd (ICEX) has opened an
avenue to harness the huge investment potential lying with the small and the
unorganised players. It further offers membership to all the BBA members. It further,
jointly deepens the markets in order to encourage wider participation, by providing
multiple delivery centres across the country by leveraging on MMTC's and BBA's pan-
India network. BBA will be an important stake holder in exchange's efforts in
strengthening the delivery infrastructure and also in launching customised contracts
suited to requirements of Indian markets.
15
In a move to boost the industry, the government has formulated new rules for faster
clearance of import and export consignments of specific goods including jewellery and
gems.
Furthermore, the government has incorporated some other measures like providing
interest subvention of 2 per cent to labour intensive export sectors and duty drawback
facilities, in order to promote gems and jewellery export.
The Road Ahead
The country-specific trade centre of India, the India Trade and Exhibition Centre
(ITEC), will start functioning in Sharjah from October 2010. ITEC will be a one-stop-
shop for Indian businessmen and small and medium enterprises (SMEs), which will
assist them to explore potential markets and opportunities in the UAE, Gulf
Cooperation Council (GCC) nations, the Middle East and North African region. ITEC
will organise exhibitions every month till June next year with focus on gems and
jewellery being showcased in April 2011. The exhibitors who will showcase their
products in these exhibitions will be organised through the export promotion council.
The Gems and Jewellery Export Promotion Council has initiated IIJS Signature to
promote India as the preferred source for jewellery and eventually build Brand India.
Signature was conceptualised to showcase India's ability to produce quality jewellery
that will match the lifestyle trends world over.
GJEPC hosted IIJS Mumbai 2010 considered to be the largest jewellery show in Asiain
August, 2010 to highlight India's capabilities to manufacture jewellery in terms of
design, craftsmanship and quality at par with international centres and also to foster
relations with other markets around the world.
16
________________ ____ _________________________ Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation
for the purchase or sale of any financial instrument or as an official confirmation of any
transaction. The information contained herein is from publicly available data or other
sources believed to be reliable but do not represent that it is accurate or complete and it
should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s
affiliates shall not be in any way responsible for any loss or damage that may arise to any
person from any inadvertent error in the information contained in this report. This document
is provide for assistance only and is not intended to be and must not alone be taken as the
basis for an investment decision.
17
Firstcall India Equity Research: Email – info@firstcallindia.com
C.V.S.L.Kameswari Pharma
U. Janaki Rao Capital Goods
D. Ashakirankumar Automobile
A. Rajesh Babu FMCG
H.Lavanya Oil & Gas
T. Joshna Devi Diversified
P. Nageswara Rao Diversified
Dheeraj Bhatia Diversified
Manoj kotian Diversified
Nimesh Gada Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover
Offers, Offer for Sale and Buy Back Offerings.
Corporate Finance Offerings include Foreign Currency Loan Syndications,
Placement of Equity / Debt with multilateral organizations, Short Term Funds
Management Debt & Equity, Working Capital Limits, Equity & Debt
Syndications and Structured Deals.
Corporate Advisory Offerings include Mergers & Acquisitions(domestic and
cross-border), divestitures, spin-offs, valuation of business, corporate
restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &
Execution, Project Financing, Venture capital, Private Equity and Financial
Joint Ventures
Firstcall India also provides Financial Advisory services with respect to raising
of capital through FCCBs, GDRs, ADRs and listing of the same on International
Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and
other international stock exchanges.
For Further Details Contact:
3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071
Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089
E-mail: info@firstcallindiaequity.com
www.firstcallindiaequity.com
Recommended