Friday, February 27, 2015
Tara Jewels Limited 534756 : Jewellery lovers should buy at CMP of 77-78 for long term target of 150
Tara Jewels Limited is a public listed company since 2012 .It came up with public issue in Nov2012 at price range of 225-230. An integrated player in the jewellery industry with experience ranging from designing to manufacturing and retailing of jewellery with a portfolio of products that includes studded gold, platinum and silver jewellery. The company has three manufacturing facilities spread across approximately 53,000 sq ft and is one of the largest studded jewelry exporters from India since 2001. Tara Jewels has been a pioneer in jewelry manufacturing with known patented technologies which have revolutionized jewelry manufacturing to maximize productivity.
Tara Jewels growth can be attributed its range of over 50,000 designs that cater to a diverse audience across over 20 countries in five continents. They have retailers across Australia, Canada, China, New Zealand, Russia, South Africa, the United States, the United Kingdom as well as the rest of Europe
Industry overview
The market size of the domestic Gems and Jewellery industry was estimated at ` 251,000 crore in 2013, with a potential to grow to ` 500,000 – 530,000 crore by 2018.The industry makes significant contribution with exports of over ` 220,000 crore. This accounts for more than 14% of total Indian exports. In addition, the investment demand in the form of bars and coins could potentially reach ` 180,000 –190,000 crore by 2018, from` 100,000 crore ,
Factors affecting the performance
During 2012-13, the increasing Current Account Deficit as well as restricting imports of gold put pressure on the industry. These restrictions did have an impact on the overall industry performance and the stock price also got beating and it touched all time low of Rs 70.
Gold is second largest import burden after the crude and is always subject to regulation and currently there is 10% import duty imposed to restrict imports which is a negative for the sector currently.
Growth drivers
Customer Preference: Changing consumer taste towards branded and international jewellery will enhance the growth of branded jewellery manufacturers Increasing Women Workforce: More and more women have started working in India. This has empowered them to make purchases of their own choice. Jewellery being their undying love, they will purchase more of it.
Exports: Initiatives undertaken to improve infrastructure,innovation, and skill would lead to greater competitiveness in the export market.
Financial Performance :Company has shown growth in revenue of approx 4 % with an EPS of Rs 16 per share in -2013-14 which reduced from EPS of 32(2012-13) to 16 in 13-14 due to which stock faced lot of beating and at present also hovering around the lower range of 70-78.For year 14-15 upto Q-3 it Has achieved revenue of approx 1037 crores with NP of about 21 crores expecting year to end with a net profit of minimum 25 crores resulting an EPS of 10-11.Stock is available at cheap multiple of 7.
In lieu of above the stock is cheap and can only move up from existing levels.Any removal of import duty will help stock price to go up and there are high chances of the import duty waiver in near future.
About 82% holding is with promoters and FIIs and Domestic mutual funds .
Investors should buy this jewel at existing level for long term investment instead of investing in gold or jewellery.
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it is tough to comment on the reason for low price of stock but past performance and future busines prospects are key factors which affect the share price.I feel company had not performed well in last 2 quarters and also went for capital infusion which probably market didn't like.recent quarter company has again got into some profitability and since business environment/sentiment is changing the share price could go up
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