Gitanjali stock may appreciate by 50% in one year

Gitanjali stock may appreciate by 50% in one year

By Rajiv Kapoor | 14 January, 2017
Gitanjali stock, gems and jewellery sector, Indian economy, GDP.

The gems and jewellery sector plays a significant role in the Indian economy, contributing around 6-7% to the country’s GDP. Based on its potential for growth and value addition, Government of India has declared the gems and jewellery sector as a focus area for export promotion. It has recently undertaken various measures to promote investments and to promote “Brand India” in the international market. India is deemed to be a hub of the global jewellery market because of its low costs and availability of high-skilled labour, making it the world’s largest cutting and polishing centre for diamonds. The country exports 95% of the world’s diamonds, generating over US$40 billion of revenue from exports, making it the second largest exporter after petrochemicals. In the coming years, growth in gems and jewellery sector would be largely contributed by the development of large retailers, as established brands are guiding the organised market and opening new opportunities. Relaxation of restriction in gold import and reintroduction of low cost gold metal loans are expected to drive the volume growth for jewellers over short to medium term and give a boost to the industry.

The Gitanjali Group is the world’s largest integrated branded jewellery manufacturer-retailer, with an annual turnover of over $2 billion. The company was established in 1966 and today its activities are spread across the entire value chain, from rough diamond sourcing, cutting, polishing and distribution, jewellery manufacturing to branding and retailing gold and diamond jewellery in the country and abroad. The group pioneered jewellery retail revolution in India by launching “Gili” in 1994 and today owns and distributes eight out of the top ten jewellery brands in the country including Gili, Nakshatra, Asmi, Sangani and Nirvana. Gitanjali’s extensive network of own stores, shop-in-shops and franchise outlets span across 200 cities and 3,000 points of sale. It has two world-class diamond polishing facilities in India, located at Surat and Hyderabad, while the domestic jewellery manufacturing facilities are located at Mumbai, Hyderabad, Surat and Jaipur. The international manufacturing set-up at Thailand has a total capacity of almost 1 million pieces per month, while the group’s international design hub is located at Italy. Over the last two decades, the group has expanded operations in the US, UK, Belgium, Italy and the Middle East, to China, Singapore and Japan. At present, it also owns a large retail chain in the US, Samuels Jewelers Inc, and has acquired a number of brands such as Stefan Hafner, Valente and others in Italy. There are plans for the company’s subsidiary Nakshatra World to raise funds through the IPO route in 2017 and this will translate into improvement of Gitanjali Group valuation to a large extent and also its stock price on the exchanges. The stock, currently quoting at Rs 66, can easily appreciate by 50% in the next one year.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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