Wednesday, January 4, 2012


1. Huge Liquidation pressure from higher level witnessed.

2. High Volatility at the Top Price.

3. Breach of rising trend line.

4. Large magnitude bar with wide range and high volatility at the Top Price.

5. Breach of long RSI support at 62. Current RSI is 57.67.

6. Formation of negative in side bar on quarterly basis.

7. Gold price placed well below the Daily and Weekly Moving averages.

8. Gold price below 200 DMA on Daily time frame.

To read the full report: COMEX GOLD

>GITANJALI GEMS LIMITED: Four leading diamond jewellary brands of Gitanjali Gems- Gili, Nakshatra, Asmi and D’Damas rose 84 per cent i.e. Rs. 2769 crore in the last two years

■ Q2 FY12 Results Update
Gitanjali Gems Ltd has posted net profit of Rs 1322.46 million for the quarter ended on September 30, 2011 as against Rs 800.29 million in the same quarter last year, an increase of 65.25%. It has reported net sales of Rs 31676.41 million for the quarter ended on September 30, 2011 as against Rs 25097.10 million in the same quarter last year, a rise of 26.22%. Total income grew by 26.23% to Rs.31701.31 million from Rs.25112.96 million in the same quarter
last year. During the quarter, it reported earnings of Rs 15.32 a share.

■ Net Sales &; PAT growth
During the quarter, Net sales rose by 26.22% to Rs. 31676.41 million from Rs.25097.10 in the same the quarter last year and the Total Profit for quarter ended September 2011 was Rs.1322.46 million grew by 65.25% from Rs.800.29 million compared to same quarter last year.

Due to increase in equity capital the basic EPS of the company stood at Rs.15.32 for the quarter ended Sep. 2011 from Rs.9.50 for the quarter ended Sep. 2010.

■ Acquisition of 100% stake of 'Crown Aim Limited’
Gitanjali Gems Ltd has acquired 100% stake of 'Crown Aim Limited' ('Crown Aim'). Thus Crown Aim has become step down subsidiary of the Company. Crown Aim is a Hong Kong based Company engaged in the business of distribution of Jewellery to China, Japan, USA, Middle East and Europe. In Addition, Crown Aim has a Jewellery manufacturing unit in China and plans to setup retailing of Jewellery in China. Crown Aim also has a 100% subsidiary with the name Alfred Terry Holding Limited and a step down subsidiary named Alfred Terry Limited in London, for distribution of Jewellery in UK.

Incorporation of wholly Owned Subsidiary 'Leading Italian Jewels S.r.l., Italy'
Gitanjali Gems Ltd has incorporated a Wholly Owned Subsidiary in the name of Leading Italian Jewels S.r.l in Italy with a view to expand its business in Italy and adjoining region. The main activity of the newly incorporated wholly owned subsidiary is trading in precious stones, diamonds jewellery, pearls, etc.

■ Incorporation of Wholly Owned Subsidiary GGL Diamond LLC in USA
Gitanjali Gems Ltd has incorporated GGL Diamond, LLC in United States of America, through its wholly owned subsidiary Gitanjali USA, Inc. The main object of GGL Diamond LLC is to source and distribute diamond and jewellery.

 ■ Incorporation of Wholly Owned Subsidiary 'Aston Luxury Group Ltd' in Hong Kong

Gitanjali Gems Ltd has incorporated a Wholly Owned Subsidiary in the name of 'Aston Luxury Group Limited' in Hong Kong with a view to explore and expand the International business of the Company in Asia Pacific.

To read the full report: GITANJALI GEMS

>AGRICULTURE SECTOR: Prefer Chambal over Coromandel & UPL over Rallis

  • Decline in food grain prices (refer to our report on Rural steroid is ebbing) have affected farmers’ profitability and is likely to put pressure on agri input consumption
  • We believe that complex fertiliser players will be affected more than the urea players while in agro chemicals domestic players will face severe impact than exports based players
  • We prefer Chambal fertiliser (urea base player) over Coromandel (complex fertiliser base) and United Phosphorous (Agrochem exports) over Rallis India (domestic focus)
  • Downgrade earnings and target price for Rallis India and Coromandel, maintain for Chambal and United Phosphorous

■ Complex fertiliser based players to be affected more than urea, Prefer Chambal fertiliser over Coromandel
Growth moderation in agri input consumption may have adverse impact on fertiliser consumption also (as witnessed in FY03, kindly refer to chart on next page). However domestic urea production is unlikely to be affected due to drop in demand (if any) since imports contribute ~23% total urea consumption and any reduction in demand is likely to reduce imports while keeping the domestic production intact. Complex fertilisers have been brought under NBS and companies have increased prices significantly to pass on higher input cost. However contraction in fertiliser demand may put pressure on complex fertiliser manufacturers and squeeze companies’ margins. As a result we prefer urea based players like Chambal Fertiliser over complex fertiliser players like Coromandel International.

■ Agrochemicals - export based players to benefit while domestic players may see demand pressure, prefer UPL over Rallis
Projecting a weak demand environment for agri input, we expect pesticide consumption to come under pressure and companies may also see contraction in margins. Exports oriented players may benefit from buoyant global demand environment and currency depreciation. Under the current circumstances, we prefer United Phosphorous which is largely a global player since India account for <25% of total revenues and profits over Rallis India (where exports contribution is ~30%).

■ Earnings and valuations to take a hit, downgrade Coromandel & Rallis
Affected by weak demand outlook and margin pressure in near future, we are reducing our earnings estimates for Coromandel and Rallis and subsequently downgrade these stocks from BUY to Hold. Though strong balance sheet (cash surplus) and higher RoE (28%+) are key strengths of these companies but we expect earnings multiple to contract owing to deceleration in earnings growth. Also we expect that the premium multiple which these stocks were enjoying over the peers is likely to come down.

To read the full report: AGRICULTURE SECTOR