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.
Well.Brand's quite strong.But Management quality requires a re-consideration.Cos they keep repeating same mistakes over time.Will watch the space for some time b4 investing!
ReplyDeletehappy Diwali.
ReplyDeleteyour view on Lycos internet?
Greetings Yogi
ReplyDeleteWith the recent withdrawal of high denomination currency there is shortage of cash. As reported in media jewellery market will be hit substantially.
My question is Will this impact gitanjali gems?
This stock is trading low, should it be bought now to make profit in the near future, or is that the current situation may not impact the prospects of this stock?
As per my view. Gitanjali gems is more of a global brand as 65 Percent of their sales comes from other countries. So demonitisation would not have that significant impact on gitanjali.Moreover there is a big opportunity for organised jewellery retail stores going forward. Organised players will snactch the business from unorganised player going forward.
ReplyDeleteGitanjali's Brand Value is about 11000 Cr.
Sales is Around 10000 Cr.
If Company Does a profit of 90 Cr which is very much possible.
We can see a Marketcap of around 1800 Cr.
Current Marketcap is 650 Cr.
This price is very attractive.
In past it has became 5 Bagger 2 Times.
M seeing a Marketcap of atleast 2000 Cr in 1.5 yrs.
If u see peers.
PCJ Is Trading at Marketcap of around 6000 Cr. Sales is 7000 cr.
So if gitanjali does well. It could even touch a Marketcap of atleast 4000 Cr in 3 Yrs time.
This is my view.Lets see. Markets are Ultimate though.
Thanks Suyog for giving a different perspective and the education.
DeleteTrading around 54 Just got more cheaper for new entrants. Nakshatra IPO would unlock the value to a great extent.
DeleteSeeing a fall as most of the people stuck earlier are selling this gem. Lot of people stuck from 300 Rs to 100 Rs. So with every jump stock witnesses a selling pressure. But once the weak hands exit the stock will be bumper shooter.. Will see circuit Trends above 100 Rs.
Disc: Invested in big.
Trading around 54 Just got more cheaper for new entrants. Nakshatra IPO would unlock the value to a great extent.
ReplyDeleteSeeing a fall as most of the people stuck earlier are selling this gem. Lot of people stuck from 300 Rs to 100 Rs. So with every jump stock witnesses a selling pressure. But once the weak hands exit the stock will be bumper shooter.. Will see circuit Trends above 100 Rs.
Disc: Invested in big.
Gitanjali Gems Giving Last Entry Opportunity for Multibagger Returns Just Before the stock shoots up Now @ 67.
ReplyDeleteHello Yogi,
ReplyDeleteI am holding 2000 shares of Gitanjali gems @ an average price of 67. Is it good to hold or book loss?
Currently am unable to exit since its locked in lower circuit(20%). Will I get a chance to exit at my buy price to avoid the notional loss incurred?
Please provide your understanding on the scam which seems to be a difficult one to exit from current levels
Hi Prasanna,
DeleteWhenever there is a major fraud (no matter which stocks) the first step should be sell the shares IMMEDIATELY.
The bigger the scam the worse will be the share price crash. There is really no bottom.
In case you miss the bus by waiting for too long and not selling, then the next option is to wait for the crash to complete, and hope for a bounce back.
Whenever the stock bottoms out, and there is a bounce, that will be the next best time to sell.
Bottom line is Just sell and protect whatever the capital that you can.
Hope and wishful thinking can become very costly. Finally we need to treat this as a lesson.
Good luck!