| Company Name | Offer Price (Rs.) | Premium (Rs.) |
| United Bank of | 66 | 7 to 10 |
| DQ Entertainment (Inter.) | 75 to 80 | 53 to 55 |
| NMDC (FPO) | 300 | 40 to 45 |
| Pradip Overseas | 100 to 110 | 13 to 14 |
| ILFS Transportation | 242 to 258 | 38 to 40 |
| Persistent Sys. | 290 to 310 | 152 to 155 |
| Shree Ganesh Jewellery | 260 to 270 | 14 to 15 |
| Infrasoft Technology | 137 to 145 | 8 to 10 |
| Goenka Diamond & Jewellery | 135 to 145 | 12 to 15 |
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Friday, March 19, 2010
Grey Market Premium - Shree Ganesh Jewellery
Asian markets open flat
Asian stocks flat after U.S. jobs and manufacturing reports boosted confidence in a global economic recovery.
Japanese benchmark index Nikkei 225 rose 64.58 points, or 0.57%, to trade at 10,805.61. Hong Kong`s is trading advanced 28.88 points, or 0.14%, at. 21,359.55. China`s Shanghai Composite increased 3.38 points, or 0.11% to trade at 3,049.47.
Taiwan`s Taiex index declined 7.56 points, or 0.10%, to trade at 7,878.78. South Korea`s Kospi index rose 3.50 points, or 0.21% to trade at 1,678.67. Singapore`s Straits Times index increased 14.59 points, or to 0.50% trade at 2,928.53. (07.30 a.m., IST)
Fedders Lloyd
Investors with a short-term trading perspective can buy the stock of Fedders Lloyd Corporation. The stock is moving in a very narrow band between Rs 75 and Rs 85 since March 3. Since this sideways move follows the small upward burst after the Union Budget from the trough of Rs 71, the stock can attempt to move higher in the near-term. It managed to close above the short-term resistance around Rs 80 as well as its 50-day moving average on Thursday. The 14-day relative strength index has moved to near 60, that is the bullish zone, and the 10-day rate of change oscillator is also reversing higher from the zero line implying that the near-term uptrend could sustain in the stock.
The stock is also in a strong medium-term uptrend since the March 2009 low. Though there was a pause in this uptrend since January 12, the fact that the stock retraced only 30 per cent of its prior uptrend denotes that the medium-term trend continues to be up. The stock can be bought with for the short-term with the target of Rs 85 and Rs 90 with the stop at Rs 76.5.
via BL
Daily News Roundup - March 19 2010
The Government has received applications from eight telecom companies, including Bharti Airtel, Reliance Communication, Tata Communication, Tata Teleservices, Vodafone Essar, Etisalat DB, Tikona and Qualcomm, to bid for 3G and broadband wireless access (BWA) spectrum to be auctioned starting April 8. (BL)
Promoters of Ratnagiri Gas and Power (RGPL), that include state-owned utility NTPC and gas distributor GAIL, said they are likely to blacklist contractor Gammon India for delaying a vital dredging work that has caused cost overruns to a gas project. (ET)
LIC which has been reportedly planning to make a foray into the banking sector, has hiked its stake in Indian Overseas Bank to close to 12%. (FE)
Bajaj Auto targets sales of 4mn bikes and three-wheelers in 2010-11, a near 40% jump from this fiscal's expected close of 2.9mn units. (BL)
Commissioning of Adani Power’s 3,300MW power plant at Tiroda in Maharashtra runs the risk of getting delayed for want of fuel due to an environment hurdle in mining coal. (ET)
Korean steel major Posco and SAIL have initiated talks to set up a steel plant under the joint venture route near state-owned company’s existing steel making facility at Bokaro in Jharkhand. (ET)
SAIL and Shipping Corporation of India will shortly sign 50:50 joint venture; a proposal that was hanging since June 2008. (BL)
Unitech plans to demerge its non-core businesses, like telecom, from the company to unlock value for shareholders. (BS)
ITC plans to open 25 new hotels under the Fortune brand during the next 12-18 months. (BS)
The income tax department conducted a search at offices of Punj Lloyd till late on Wednesday. (BS)
Punj Lloyd secured a letter of award for EPC of NGI (Mixed Case) Project in UAE from Abu Dhabi Gas Industries Ltd for a value of US$40mn. (BL)
Welspun-Gujarat Stahl Rohren said it will acquire controlling stake in construction firm MSK Projects India for Rs4bn. (ET)
Glenmark Generics, a subsidiary of Glenmark Pharmaceuticals, has received a US Food and Drug Administration (FDA) approval for a hypertension drug. (ET)
Cephalon, a US-based drug maker, has filed a lawsuit against Lupin and its US subsidiary Lupin Pharmaceuticals for challenging the patents on its sleep disorder drug Nuvigil. (BS)
Strides Arcolab bought stakes owned by South African generics drug major Aspen Pharmacare in two 50:50 cancer drug making joint ventures – Onco Therapies in India and Onco Laboratories in Cyprus - for US$117mn (Rs5.3bn). (BS)
Elder Pharmaceuticals said it had increased its stake in Bulgarian subsidiary Elder Biomeda AD to 61% from the present 51%, as part of its strategy to strengthen its presence in the European market. (BS)
BEML has secured an order worth Rs6.3bn from the Defence Ministry for supply of 788 BEML Tatra vehicles to the Indian Army within 18 months. (BL)
Dalmia Cement said it plans to spin off its cement, refractory, thermal power and certain businesses other than sugar into DCB Renewable Energy and Industries Ltd and list the new entity. (BS)
INOX has denied the claims made in a complaint to the stock market regulator by Reliance MediaWorks that Fame India promoters sold their stake in that company to INOX at an unduly low price, far lower than what RMW was willing to pay. (BS)
As part of its Rs18bn ongoing expansion programme, Apollo Hospitals is planning to open 11 more hospitals in the next fiscal which includes an additional 2,000 more beds the existing 8,800 beds. (FE)
Apollo Hospitals Group is on the look-out for hospital project commissioning orders overseas and also plans to foray into Ayurveda research. (BL)
Apollo Hospitals, Fortis Healthcare and Max Healthcare - are poised for an aggressive foray into medical education, which was opened to them recently. (FE)
Debt-ridden Vishal Retail denied fudging accounts and blamed it on printing errors by auditors, and said the firm would soon complete its corporate debt restructuring exercise. (BS)
McNally Bharat received Rs1.7bn order from Mahanadi Coalfields Ltd, Sambalpur, Orissa. (BL)
United Bank of India is negotiating with a clutch of asset reconstruction companies to sell a part of its bad loans with a view to clean up its loan book. (ET)
To overcome delays, on account of land acquisition problems, in the launch of its Rs500bn steel project in Jharkhand, global steel giant ArcelorMittal is set to relocate its plant proposed in Khunti-Gumla to Bokaro. (BS)
Factoring in the government’s push to improve its finances and higher growth, Standard & Poor's revised the outlook on India’s sovereign credit rating to stable from negative. (BS)
India is expected to double the number of branded hotel rooms from 100,000 now in just three years. (BS)
The government is expected to give additional incentives, while retaining the existing stimulus measures for the labour-intensive export sectors in 2010-11. (BS)
Days after Iran and Pakistan signed pacts to implement a long-delayed gas pipeline; India said it had proposed trilateral talks in May to address concerns that have been impeding its joining the project. (BS)
RBI could raise key interest rates ahead of its monetary policy review on April 20 if the price situation continued to deteriorate, a deputy governor of the apex bank said in the capital on Thursday. (ET)
RBI said it may come out with guidelines on new banking licences in about three months. (BS)
Sugar production in Karnataka is likely to increase 26.4% to 2.1mt in the present sugar season compared with 1.7mt last year. (BS)
The Food and Agriculture Minister said it has no plans as of now to re-impose customs duty on white sugar or permit wheat exports. (BS)
India, Brazil and the EU have come together to press for convergence of all national standards with the relevant international standard to check arbitrariness in rules that often leads to rejection of shipments by importing countries. (ET)
EGOM on national highways has decided to convert 10,000 km of roads into national highways. (FE)
India’s food inflation for week ending March 6 dropped to a four-month low of 16.3%. (FE)
Four education reforms Bills of HRD ministry, including one seeking to ban unfair practices in technical and medical educational institutions and universities, are expected to come up before the Union Cabinet on Friday. (FE)
Joy of being stable!
Being born in a stable does not make one a horse- Arthur Wellesley.
The main indices managed to gallop towards the end following S&P’s upgrade of India’s ratings outlook. The key indices might just be able to stretch the winning streak a little bit more today. But remember, all stocks need to participate on the ‘stable’ outlook.
We expect a positive but sedate start and a choppy session. Volume may remain low, as has been the case lately. Select stocks will remain in the spotlight owing to the newsflow. Reports mention chances of a dollar carry trade benefiting the Indian market, similar to the yen carry trade a couple of years ago.
Cues from global markets are neither spectacular nor weak. Concerns over Greece prevail amid lack of cohesion in the EU. The nation now may resort to aid from the IMF. Worries over stringent new norms for Wall Street banks have ebbed even as the war of words persists between the US and China over yuan revaluation.
Wall Street had an indecisive session. The Dow rose for eighth straight day while the S&P ended in red. European stocks were weighed down by uncertainty over Greece. Asian markets are mixed.
Barring a few days, market breadth has been generally negative even on days when the main indices have advanced. This is a cause for concern as in a low-volume, shallow market there is always a chance that the market’s gain may not accurately reflect the reality. So, don’t get carried away if the Nifty breaches 5300 or the Sensex surpasses 18000.
Apply your mind and do your homework before taking a plunge into any stock, as valuations are not cheap. Though the key indices are nearing their previous 52-week highs, bulls don't appear to be entirely convinced. This leaves the market vulnerable to fresh selling.
FIIs were net buyers in the cash segment on Thursday at Rs4.85bn on a provisional basis. Local funds were net sellers of Rs531.5mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs11.06bn. On Wednesday, FIIs were net buyers of Rs11.71bn in the cash segment, as per the SEBI web site. Mutual Funds were net buyers of Rs328mn on the same day.
Indian markets ended with modest gains on Thursday with the key indices getting a late boost from news that Standard & Poor’s has raised India’s outlook to stable from negative.
If you take out the last 15 minutes of trade, there was hardly anything to rejoice for the bulls. The key indices were stuck in a range for most part of the day after three successive days of gains. Global cues were rather sluggish amid renewed worries over Greece.
It was a relatively a dull day as bulls seemed to take a breather after a three day broad-based rally. After opening with a positive bias, markets turned lackluster and were unable to build on to the opening gains.
The BSE Sensex marginally added 29 points to end at 17,519 after touching a high of 17,548 and a low of 17,417. The NSE Nifty added 14 points to end at 5,246.
In Asia, the Nikkei in Japan was down 1%, while Australia's S&P/ASX gained by 0.2%. Shanghai SE Composite advanced by 1.9% and Hang Seng index in Hong Kong was down 0.3%.
In Europe, stocks were trading with a negative bias. The DAX in Germany was down 0.2%, the CAC 40 index in France was down 0.3% and the FTSE in the UK was down 0.2%.
Coming back to India, among the BSE sectoral indices, the Bank index was the top gainer, adding 0.6%, followed by the Teck index that was up 0.6% and the BSE Metal index was up 0.5%. The BSE Mid-Cap and BSE Small-Cap index added 0.4% and 0.2% respectively.
Outside the frontline indices, the big gainers in the broader market were Indian Hotels, TTML, Idea, Welspun Guj and IRB Infra. On the other hand, losers included Hindustan Copper, RCF, Moser Baer and Tulip Tele.
Shares of Tata Teleservices advanced 4.5% to Rs24.65 after the company announced that the board of directors approved sale of 100% equity shares held by the company in 21st Century Infra Tele Ltd to Wireless - TT Info Services Ltd.
The towers have been valued at Rs52 Lacs per tower with an Enterprise Value of Rs13.18bn. This transaction will result in a net cash inflow to the Company (subject to adjustment at the time of payment) in excess of Rs9bn.
Shares of Bajaj Electricals advanced by 3% to end at Rs212.5 after ~3.67mn equity shares, or 3.8% of its equity, changed hands in 6 block deals on the BSE. The scrip opened at Rs207 it touched an intra-day high of Rs219 and a low of Rs207 and recorded volumes of over 7.7mn shares on BSE.
United Bank of India, the public sector lender started trading with healthy gains on the bourse. The stock got listed at Rs75 per share as against its issue price of Rs66. Finally, the stock ended at Rs68.80 translating in to a premijm of 7.5%. The state-run bank fixed the issue price of its IPO at Rs66 per share - the upper end of its price band - raising Rs3.25bn through the issue. The IPO was subscribed over 33 times.
Fedders Lloyd's announced that its Power Division has bagged orders worth Rs2.57bn from M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd., Bhopal. Shares of Fedders Lloyd shot up by over 5% to end at Rs80. The scrip opened at Rs77 it touched an intra-day high of Rs87 and a low of Rs77 and recorded volumes of over 0.11mn shares on BSE.
Shares of Punj Lloyd slipped by 0.5% to end at Rs172 after media reports stated that the IT department raided the offices of Punj Lloyd. Later, the company’s spokeswoman said that the Income Tax officials visited Punj Llyod Ltd.’s “sites” for a “routine inquiry,” today and we are fully co-operating,” with the tax department, she added.
HDIL clarified that it has not raised any money selling shares to institutions, MD Sarang Wadhawan was quoted as saying on a news channel. This news is totally baseless, he added. Media reports had stated that the company shelved its follow-on QIP after receiving tepid response from investors.
Shares of HDIL ended flat at Rs303. The scrip opened at Rs302 it touched an intra-day high of Rs306 and a low of Rs299 and has recorded volumes of over 1.6mn shares on BSE.
Bullion metals end mixed
Gold manages to add gains despite strong dollar
Precious metal prices ended mixed on Thursday, 18 March 2010. Gold prices rose marginally as the dollar went up following renewed concerns over Greece's fiscal problems. Silver prices slipped.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Thursday, gold for April delivery ended at $1,127.5 an ounce, higher by $3.3 (0.3%) an ounce on the New York Mercantile Exchange. During intra day trading, gold rose to a high of $1,129.5. Last week, gold fell 2.4%. In FY 2010, gold touched a high of $1,154 in January.
On Thursday, May Comex silver futures ended lower by 9.7 cents (0.55%) at $17.42 an ounce. Last week, silver ended lower by almost 1.9%.
Doubts about the euro zone's aid plan for the debt-strapped Greek government resurfaced amid talk that Greece might resort to help from the International Monetary Fund.
In the currency market on Thursday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.6%.
The latest FOMC policy statement that came out earlier during the week was little changed from previous directives. The Fed has left its target federal funds rate unchanged at a range of 0.00% to 0.25% and the Fed said that it continues to expect an exceptionally low level for an extended period.
On Capitol Hill, Federal Reserve Chairman Ben Bernanke testified on Wednesday about efforts to reform banking regulation, telling Congress the Fed's participation in the oversight of banks improves its ability to carry out its monetary goals.
Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.
Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.
At the MCX, gold prices for April delivery closed higher by Rs 81 (0.48%) at Rs 16,768 per ten grams. Prices rose to a high of Rs 16,780 per 10 grams and fell to a low of Rs 16,638 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed Rs 63 (0.23%) lower at Rs 27,106/Kg. Prices opened at Rs 27,158/kg and fell to a low of Rs 26,957/Kg during the day's trading.
Crude falters
Prices end lower as dollar firms up
Crude oil prices ended lower on Thursday, 18 March 2010. Prices fell as the dollar went up following renewed concerns over Greece's fiscal problems. Prices could not recover despite better than expected economic data.
On Thursday, crude-oil futures for light sweet crude for April delivery closed at $82.2/barrel (lower by $0.73 or 0.9%). Prices lost 0.4% last week.
Crude prices rose 9.3% in February as supply-and-demand issues began to take hold in a market for months dominated by moves in the dollar. Prices have ranged between $69 and $84 a barrel since October. Crude has risen 71% in last one year.
Doubts about the euro zone's aid plan for the debt-strapped Greek government resurfaced amid talk that Greece might resort to help from the International Monetary Fund.
In the currency market on Thursday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.6%.
Among economic data for the day, the Labor Dept reported that in the week ended 13 March, initial claims dropped to a seasonally-adjusted 457,000 from 462,000 in the prior week.
Other than that, the Conference Board's index of leading economic indicators climbed 0.1% in February for an 11th consecutive monthly rise, with the private research group predicting conditions will improve modestly in the near term. Also, manufacturing activity in the Philadelphia region improved for a seventh consecutive month, according to the Federal Reserve Bank of Philadelphia.
In the latest weekly inventory report, the EIA reported yesterday that U.S. crude inventories rose by 1 million barrels in the week ended 12 March. Market had been looking for an increase of 1.9 million barrels.
The EIA also said the week's gasoline supplies fell by 1.7 million barrels and distillate stocks dropped by 1.5 million barrels. Market had expected declines of 1.5 million barrels for gasoline and 1.6 million barrels for distillates.
Yesterday, Organization of Petroleum Exporting Countries decided to keep its production quota unchanged.
IEA was the latest one to raise demand forecast for crude last week. The IEA revised up by 70,000 barrels a day its oil demand forecast for 2010, pointing to growth in Asia. As per the report, global oil demand is expected to rise by 1.6 million barrels a day, or 1.8% year-on-year, to 86.6 million barrels a day in 2010. In contrast, demand is estimated to have contracted by 1.2 million barrels a day, or 1.4% year-on-year, to 85.0 million barrels a day in 2009.
The report detailed that after five consecutive quarters of decline, global oil demand began growing again on a yearly basis in the fourth quarter of 2009. However, this year's demand growth will be fueled entirely by emerging countries, particularly those in Asia.
Among other energy products on Thursday, gasoline for April delivery fell 0.9 cents to $2.30 a gallon, while heating oil for the same month fell 1.9 cents to $2.12 a gallon.
Also on Thursday, natural gas for April delivery fell 21.3 cents, or 5%, to $4.09 per million British thermal units. It earlier traded as high as $4.33 per million Btus. Natural-gas futures fell 5% after the EIA said U.S. supplies of natural gas in storage fell by 11 billion cubic feet, much less than expected.
Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 45% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for April delivery closed Rs 5 (0.13%) higher at Rs 3,765/barrel. Natural gas for March delivery closed at Rs 186.7/mmbtu, lower by Rs 8.9 (4.5%).
Shree Ganesh Jewellery House IPO Analysis
Incorporated in August 2002 in West Bengal, Shree Ganesh Jewellery House (SGJHL) is promoted by Umesh Parekh and Nilesh Parekh, third generation entrepreneurs of family run gem & jewellery business. The company is one of the largest manufacturers and exporters of the handcrafted gold jewellery from India and markets its jewellery products under brand name ‘Gaja', ‘Sitaare', ‘GM', ‘Marigiold', ‘G elements', ‘Gold Bridals', ‘Dianique', ‘You' and ‘Distar'. The products include handcrafted and hallmarked gold jewellery, gold enameled jewellery and gold jewellery studded with precious stones and semi precious stones. The products are primarily exported to countries such as UAE, Singapore and Hong Kong.
The company has four manufacturing units located in Manikanchan SEZ in West Bengal,which is presently the only jewellery SEZ in West Bengal. The company has 14 subsidiary companies, all of which are into manufacturing and exports of gold products, including one overseas subsidiary: Shree Ganesh Jewellery House at Singapore. Apart from Gokul Jewellery House, the company is set to amalgamate its 11 other subsidiaries with one of its subsidiary, Easy Fit Jewellery.
The total capacity of the company as of year ended March 2009 was 17,500 kg of gold products. The company plans to expand its manufacturing capacity to 43,000 kg of gold products per annum by FY 2012. To raise capex funds, the company is tapping capital market with an issue of 1,42,69,831 equity shares of face value Rs 10 each, at a price band of Rs 260- Rs270 per share, through book building process. This issue of 1,42,69,831 equity shares includes fresh issue of 1,21,36,497 equity shares by the company and an offer for sale of 21,33,334 equity shares by its PE investor, Credit Suisse PE Asia Investments (Mauritius). Thus, the total equity capital of the company post-issue will amount to Rs 60.68 crore.
The entire project cost along with the working capital requirements of the company (totaling to Rs 281.64 crore) is to be met by equity proceeds. The company intends to use more than 25% of the net issue proceeds for general corporate purposes like repayment of loans, etc. All the projects are expected to be completed by November 2010.
Expansion Plans:
* At Mondalpara,West Bengal, the company plans to set up manufacturing unit of plain and studded gold Jewellery with annual capacity of 450 kg of gold, two units for manufacture of machine made Italian jewellery, with an annual installed capacity of 1,500 kg of gold and a facility to manufacture of bangles with annual installed capacity of 600 Kg of gold. The company also plans to incorporate a hall marking plant at this unit. The total capex of this unit is Rs 13.71 crore.
* At Domjur,West Bengal, the company plans to set up annual installed capacity of 2,000 kg of diamond studded jewellery along with an electorforming plant with an annual installed capacity of 2250 Kg of gold and gold refinery plant with an annual installed capacity of 1,000 kg of gold. The capex of this project is Rs 74.93 crore.
* The company plans to expand its existing manufacturing facility at Manikanchan SEZ, West Bengal, by setting up of facility for manufacture of diamond studded jewellery with a capacity of 1,000 kg of gold and 75,000 carats of diamond per annum, a facility for manufacturers of bangles with and annual installed capacity of 600 kg of gold, an electroforming plant with an annual installed capacity of 1,00 kg of gold jewellery, and an unit for manufacturer of machine made Italian jewellery with an annual installed capacity of 3,000 kg of gold. The total capex of this unit amounts to Rs 55.86 crore.
* Apart from setting up the manufacturing units, the company plans to expand its reach by opening 49 retail outlets in different formats by FY 2013. The breakup of the different format outlets are: 14 owned outlets, 3 outlets on rent, 11 franchise model outlets and 11 shop-in-shop outlets. The company has entered into an agreement with Vishal Retail for shop-in-shop arrangements in existing outlets. The capex for expanding the retail outlets is estimated at Rs 68.04 crore.
* In order to strengthen and diversify its customer base and for easy procurement of gold, the company intends to incorporate a subsidiary in Dubai.
* Due to its presence in the raw material intensive gem & jewellery industry, the company plans to provide Rs 69.10 crore for its working capital requirements.
Strengths:
* Strategic location of the company in West Bengal makes it easy for availability of karigars (skilled workmen) for handcrafted jewellery at low costs.
* The market share of the company in the domestic gold jewellery exports has jumped from 1.83% in FY 2007 to 6.10% in FY 2009. The company follows a strategy of expanding its presence into various geographies and product portfolios and is foraying into manufacture of machine made jewellery so as to consolidate its presence in the market.
* Even in the tough times following global economic meltdown in FY 2009, the company reported a 69% spike in net sales to Rs 2148.50 crore and a 48% jump in net profit to Rs 132.45 crore. The company has also maintained operating margins at 6.1% despite the economic meltdown.
Weaknesses:
* Gold and diamond jewellery are luxury products, forming discretionary purchases by consumers. Thus, rising gold and diamond prices, inflationary pressures or adverse economic conditions may affect sales adversely.
* Shortages of raw materials or volatility of raw material prices may also adversely affect demand. company.
* Exports formed 99.23% and 94.84% of total sales of the company for FY 2009 and H1 of FY 2010, respectively. Exports to the UAE account for approximately 48.78% and 36.62%, respectively, of the total exports. Thus, any political or economic instability in the UAE would adversely affect the the company.
* As a new entrant to the extremely competitive domestic retail jewellery market, the company has to face tough competition with astrong players in the organized retail players andun organized market players.
* All of the company's present and proposed manufacturing facilities are situated in one geographic area and thus exposed to risk or adverse developments affecting that area.
* Some of the subsidiaries of the company were reporting losses as of FY 2009. The performance of the subsidiaries, though small, will affect the financial performance of the company.
Valuation
SGJHL has set a price band of Rs 260 to Rs 270, which translates into a PE of 9.9x to 10.2x annualized EPS for the half-year ended September 2009 on post-issue equity. P/E on FY09 EPS on post issue equity works out to be 11.9x and 12.4x respectively. Against this industry composite TTM average PE stands at 12.6.
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