IPO Update: Gitanjali Gems

Diamonds are shining,but not the financials

Gitanjali Gems is entering the capital markets with its initial public offer of 1.7 Crore shares offered at a price band of Rs.170-195. Investment Guru recommend investors to subcribe to the issue. The company does not have any listed peers in the market and hence the listing of this stock will determine the valuation for such companies. Investment Guru expects moderate listing gains on listing of Gitanjali gems.

Let’s look at the Offering :

Gitanjali is the largest manufacturer and retailer of diamond and jewellery in India. The company has got two-diamond manufacturing facilities located at Borivali in Mumbai and at the SEZ in Surat. Facility at SEZ, mumbai caters to export and produces gold and platinum diamond studded jewellery.The facility at MDC, Mumbai caters to retail operations in Inida.

Gitanjali boasts of brands such as Nakshatra, Asmi, Gilli and D’Damas. These brands feature among top 10 jewellery brands in India.

For branded jewellery, the company has in place a large retail setup, which includes 26 exclusive distributors across India, around 620 outlets including those in host stores, five stand alone stores and 17 franchisee stores in 30 cities and towns in India

India continues to be a leading diamond processor in the world. India accounts for 55% of global polished diamond market in terms of value, 80% in terms of caratage and 92% in terms of pieces.

The company sources rough diamonds from countries such as Australia, Russia and South Africa. The major export destination of cut and polished diamonds are USA, Hongkong and UAE.

The object of the issue is to achieve benefits of listing and raising capital. The fund would be used for investment in subsidiaries, joint ventures and associates. The funds will also be used for setting up diamond manufacturing facility at Hyderabad and for future expansion puposes.

For Six months ended Sep,2005, the company has clocked revenues of Rs.11552 Million and a net profit of 245 million. If we expect the company to maintain the same growth in the next half of the year, the offer comes ata PE mutliple of 22 times.

The weighted average EPS for the consolidated entity comes to Rs.4.2 . Average return on networth comes to 6%. Net asset value per share comes to Rs.86.

Despite the not so exciting financials, the company future growth looks good with more market being captured by the organised sector. Also the demand for diamond jewellery is increasing in India which would further boost the local operations of the company.

Issue opens on : February 16, 2006
Issue closes on : February 21, 2006
Retail Investors :Rs. 100,000.
Registrar : Karvy Computershare


Anonymous said...

Hi Rajesh,

Its good that you also know lot about diamond and its market.

Its great help from your side.


Anonymous said...

what % gain can we expect on listing ?

Anonymous said...

what about pratibha ind?

Anonymous said...

Hello rajesh,

If you can please update on the listing strategy for INOX and the possible date for listing.

Will be heartily thankful to you,



Anonymous said...

Hi Rajesh
Radio Mirchi is coming down ?
What would you suggest sell or hold?

Anonymous said...

hI SIRg,

Hope you are well and fine,tell something about INOX i have got 100 shares in IPO what should i do.....when will the share get listed.

One more querry,in one of ur previous blogs you recommended about RIIL,in one of the magazines i read that it is still a buy and will race to 1000 rs in a year's time.What do you say.Should i take it .

Your valuable suggestions are eagerly awaited.

Thanks sirg.

Anonymous said...

Hello Rajesh,

Please comment on the INOX IPO,what next ipo do u think should be invested in.I think there is a dearth of quality IPO'S.


Anonymous said...

I regularly see your site. Its very good.
Under the prevailing market conditions,
you dont seem to update your site regularly..albeit you might be pre-occupied with your day-to-day official engagements.
Pl. find sometime to update your blog.

Jai Hind..!!!

Anonymous said...

so gitanjali is down what do you suggest ?

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