>GITANJALI GEMS: Penetration in real estate sector

Gitanjali Gems Ltd. (GGL) is one of the largest integrated diamond and jewellery manufacturers and retailers in India. The company is engaged in sourcing of rough diamonds from primary and secondary source suppliers in the international market, cutting and polishing the rough diamonds, manufacturing and selling of diamonds and other branded and unbranded jewellery.


• Substantial share in the gems and jewellery segment GGL has secured substantial market share in the customized gems and jewellary market in India with more than 35% share. With the robust distribution network across retail and wholesale markets, we expect the firm to maintain its market share.


• Indian gems and jewellery segment is expected to grow by at a 15% CAGR by FY16 During the last 4 years, the sector has grown at a CAGR of 12% till FY12. However, going forward with the rising domestic consumption, India is likely to remain as the major gold consumer in the world. Further the government initiatives like setting up of SEZ, relaxing import duties on some components is likely to help the sector.


• Strong distribution network The firm has an established network in the domestic market with around 3,000 distributors and 200 own stores. Further, acquisition of Crown Aim Limited is likely to enhance distribution network in the overseas market. Besides, the company has invested Rs 4.14bn for expansion in the UAE.


• Domestic gold consumption will remain the major revenue driver Despite the recent hike in import duties on gold and more than 25% depreciation in INR; the gold imports have remained robust during the last one year. It suggests that the domestic gold consumption will continue to grow. Therefore, we believe that GGL which has an established network is likely to benefit from stable increase in domestic gold consumption.


• Penetration in real estate sector As a strategy to diversify, the company has invested into real estate market across Mumbai and the sub urban areas. Besides this, Gitanjali Infratech has large land bank which will help the company to secure more revenue out of the real estate business.


To read report in detail: GITANJALI GEMS


RISH TRADER