Gitanjali Gems is a leading jewellery player. This company owns some of the marquee brands like Nakshatra, Gili, Asmi, Hoop, Donatella, Kashvi and others. The company also owns international brands like Giantti, Color me Bella, Stefan Hafner and Porrati.
For more info check, http://gitanjaligroup.com/
NUMBERS - THE LATEST
Market cap: 820 crores CMP on Day20 Oct2016: Rs 75 BV: 360
Revenue FY16: 13,900 cr Net profit FY16: 133 cr FV: 10
POSITIVES
1. Consolidated profit in Q1FY17 almost increased 3 times to 57 crore from around 19 crore a year earlier, demonstrating the turn-around.
2. Long term debt has reduced from 750 crore to 520 crore in the last FY. Step in the right direction
3. Gitanjali operations in India comprise of around 3000 points-of-sale including 200 own stores, 150 franchisees, 675 shop-in-shops and 2000 retailers.
4. Global operations include 108 stores in the USA and 500 retailers, 4 stores in UAE and 50 SIS, Portfolio of Italian brands for Europe.
5. After the debacle the company experienced 2 years ago, their TV and media adverts had almost stopped. However recently advertisements in various media has picked up indicating the company's direction.
Positive changes in FY2016 indicating a turn-around
1. eCommerce sales of the company was over 210 crore through their portal Jewelsouk (recent TV adverts featuring Shraddha Kapoor)
2. In modern retail (SIS = shop-in-shop) market share of Gitanjali increased from 58% to 72%
3. Samuels, the American operations of Gitanjali, is the 4th largest speciality retailer in the US, in the worlds largest diamond jewellery market.
4. Recognizing the dynamics of the market and the demands of the new generation, the company is focusing on fine jewellery from light-weight material and also platinum jewellery.
INTERESTING INFO
1. From a low of Rs. 110 in July 2006 Gitanjali stock made a high of Rs. 440 in Jan 2008 (a 4-bagger in less than two years)
2. From a high of 440 in Jan 2008 the stock sold-off to a low of 40 in Mar 2009
3. Again, from a low of 98 in May 2010 Gitanjali stock made a high of 620 in Apr 2013 (a 6-bagger in less than three years)
4. Once again, from a high of 620 in Apr 2013 the stock collapsed to a low of 32 in Mar 2016
Will history repeat? That only time will tell.
However, people venturing into this stock for sure can have a massive roller coaster ride. As long as you are in the right direction, this could be a profitable opportunity. In the wrong direction, you could loose big time.
NEGATIVES - POSSIBLE RISKS
1. Clearly Gitanjali stock is volatile. Due to the sharp and massive up-moves and down-moves, this is not for the weak hearted.
2. Short term borrowings of the company is almost around 7500 crores. This could be mainly due to the huge working capital requirements. With new expansion in plans, the company needs to be prudent in managing this aspect of the business. This could be a big factor in the determining the future of the stock.
MY TAKE
Shares of Gitanjali being hugely volatile is an understatement. In less than a decade, the company became a multibagger twice only to collapse in a very sharp and brutal manner. So this is a risky stock.
Having said that, looking at the track record of the business, its scope and potential growth, the company is currently available at a very cheap price. Also, the company is in the middle of a turnaround. If the management can successfully charter the minefields and steer the company in the positive direction, it could well become a multibagger once again.
It is well placed to become a multibagger the third time around!!
Disclosure: I own shares in Gitanjali.
For commercial collaboration, consultation and JV ideas;
you can contact me via zorbayogi9@gmail.com
Important Note: Potential multibaggers are those stocks which have potential to give 100 - 500% profits. Obviously such returns take time. Probably 3 - 4 years or more. Short term volatality is the reality of the stock market and that will always happen. Short term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 - 4 years. As long as you buy a stock for the right reason and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW.
Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your home work, own analysis and make your own decisions.
For more info check, http://gitanjaligroup.com/
NUMBERS - THE LATEST
Market cap: 820 crores CMP on Day20 Oct2016: Rs 75 BV: 360
Revenue FY16: 13,900 cr Net profit FY16: 133 cr FV: 10
POSITIVES
1. Consolidated profit in Q1FY17 almost increased 3 times to 57 crore from around 19 crore a year earlier, demonstrating the turn-around.
2. Long term debt has reduced from 750 crore to 520 crore in the last FY. Step in the right direction
3. Gitanjali operations in India comprise of around 3000 points-of-sale including 200 own stores, 150 franchisees, 675 shop-in-shops and 2000 retailers.
4. Global operations include 108 stores in the USA and 500 retailers, 4 stores in UAE and 50 SIS, Portfolio of Italian brands for Europe.
5. After the debacle the company experienced 2 years ago, their TV and media adverts had almost stopped. However recently advertisements in various media has picked up indicating the company's direction.
Positive changes in FY2016 indicating a turn-around
1. eCommerce sales of the company was over 210 crore through their portal Jewelsouk (recent TV adverts featuring Shraddha Kapoor)
2. In modern retail (SIS = shop-in-shop) market share of Gitanjali increased from 58% to 72%
3. Samuels, the American operations of Gitanjali, is the 4th largest speciality retailer in the US, in the worlds largest diamond jewellery market.
4. Recognizing the dynamics of the market and the demands of the new generation, the company is focusing on fine jewellery from light-weight material and also platinum jewellery.
INTERESTING INFO
1. From a low of Rs. 110 in July 2006 Gitanjali stock made a high of Rs. 440 in Jan 2008 (a 4-bagger in less than two years)
2. From a high of 440 in Jan 2008 the stock sold-off to a low of 40 in Mar 2009
3. Again, from a low of 98 in May 2010 Gitanjali stock made a high of 620 in Apr 2013 (a 6-bagger in less than three years)
4. Once again, from a high of 620 in Apr 2013 the stock collapsed to a low of 32 in Mar 2016
Will history repeat? That only time will tell.
However, people venturing into this stock for sure can have a massive roller coaster ride. As long as you are in the right direction, this could be a profitable opportunity. In the wrong direction, you could loose big time.
NEGATIVES - POSSIBLE RISKS
1. Clearly Gitanjali stock is volatile. Due to the sharp and massive up-moves and down-moves, this is not for the weak hearted.
2. Short term borrowings of the company is almost around 7500 crores. This could be mainly due to the huge working capital requirements. With new expansion in plans, the company needs to be prudent in managing this aspect of the business. This could be a big factor in the determining the future of the stock.
MY TAKE
Shares of Gitanjali being hugely volatile is an understatement. In less than a decade, the company became a multibagger twice only to collapse in a very sharp and brutal manner. So this is a risky stock.
Having said that, looking at the track record of the business, its scope and potential growth, the company is currently available at a very cheap price. Also, the company is in the middle of a turnaround. If the management can successfully charter the minefields and steer the company in the positive direction, it could well become a multibagger once again.
It is well placed to become a multibagger the third time around!!
Disclosure: I own shares in Gitanjali.
For commercial collaboration, consultation and JV ideas;
you can contact me via zorbayogi9@gmail.com
Important Note: Potential multibaggers are those stocks which have potential to give 100 - 500% profits. Obviously such returns take time. Probably 3 - 4 years or more. Short term volatality is the reality of the stock market and that will always happen. Short term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 - 4 years. As long as you buy a stock for the right reason and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW.
Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your home work, own analysis and make your own decisions.
