1

SYNOPSIS

Shree Ganesh Jewellery House Ltd. is a company with a turnover of US$ 1.28 Billion. It exports its products primarily to the U.A.E., Singapore, and Hong Kong.

The Company has declared a final dividend of Rs.3 per share for the FY 2011.

During the quarter company’s manufacturing unit at Mondalpara, West Bengal has commenced commercial production.

During the year the Company added 13 retail / wholesale stores taking the total number to 20 stores across India.

As on 31, March 2011 the Current order book size stands at Rs. 50,000 million.

Net Sales and PAT of the company are expected to grow at a CAGR of 32% and 28% over 2010 to 2013E respectively.

Years Net sales EBITDA Net Profit EPS P/E

FY 11 52543.00 3429.80 2638.50 43.48 5.98

FY 12E 60424.45 4146.09 3063.43 50.49 5.15

FY 13E 68279.63 4682.11 3493.15 57.57 4.51

Stock Data:

Sector: Jewellery

Face Value Rs. 10.00

52 wk. High/Low (Rs.) 286.00/113.05

Volume (2 wk. Avg.) 80000

BSE Code 533180

Market Cap (Rs in mn) 15770.73

Share Holding Pattern

1 Year Comparative Graph

SGJHL BSE SENSEX

C.M.P: Rs. 259.90 Target Price: Rs. 294.00 Date: July 9th 2011 BUY

SHREE GANESH JEWELLERY HOUSE LTD

Result Update: Q4 FY 11

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Peer Group Comparison

Name of the company CMP(Rs.) Market

Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

Shree Ganesh Jewellery 259.90 15770.73 43.48 6.00 1.95 20.00

Rajesh Exports 104.70 31002.30 8.40 12.50 2.22 100.00

Gitanjali Gems 302.70 25690.60 26.46 11.44 1.14 20.00

Suraj Diamond 48.30 3228.60 16.71 2.89 0.34 12.50

*As on 09/07/2011

Investment Highlights

Q4 FY11 Results Update

During the quarter, the company disclosed a standalone profit of Rs. 476.20

million as against of Rs.499.45 million for the quarter ended March 31, 2010. Net

sales are increased by 27% to Rs. 11075.30 million from Rs. 8708.24 million in the

same quarter previous year. In the same period, standalone total income of the

company was at Rs. 11082.00 million, a rise of 27% over the prior year period.

Company EPS is stood at Rs.7.85 for the quarter ended March 2011.

Quarterly Results - standalone (Rs in mn)

As At Mar-11 Mar-10 %change

Net sales 11075.30 8708.24 27

Net profit 476.20 499.45 (5)

Basic EPS 7.85 10.29 (24)

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Break-up of Expenditure

Segment Revenue

4

Declaration of Dividend

The Company has declared a final dividend of Rs. 3 per equity share of Rs.10

for the year ended March 31, 2011.

Company Profile

Shree Ganesh Jewellery House Ltd. is a company with a turnover of US$ 1.28 Billion

and is a 4 star export house (Govt. of India recognized). The company is one of the

largest manufacturer and exporter of hallmarked and handcrafted gold jewellery from

India and the shares of the company are listed in Bombay Stock Exchange and

National Stock Exchange.

The Company is headquartered in Kolkata, with subsidiary offices in Hyderabad,

Chennai, Bangalore, and Delhi. The group is into manufacturing of gold, diamonds

and gemstone studded jewellery.

Shree Ganesh Jewellery House Ltd. is one of the largest manufacturer and exporter of

handcrafted gold Jewellery in India, exporting primarily to countries such as U.A.E.,

Singapore, and Hong Kong. The products portfolio includes handcrafted and

hallmarked gold jewellery, gold enameled jewellery and gold jewellery studded with

precious stones. The products, designed by a team of highly creative designers, have

presence across different price points to cater to all customers across high-end, mid-

market and value market segments allowing the Company to build a large and diverse

portfolio of designs.

The Company has manufacturing units located in Mondalpara, Manikanchan SEZ

which is presently the only jewellery SEZ in West Bengal and Domjur (upcoming). As

of March 31, 2011, the Company has 20 retail outlets and it intends to open forty

nine retail outlets across India including outlets under the shop-in-shop and

franchisee models.

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Products

� Gold- Plain Jewellery

� Gold Antique Jewellery

� Diamond Jewellery

� Kundan Jewellery

� Polki Chakri

� Ruby-Emerald Jewellery

� Light Weight Italian Jewellery

Brand & Collections

Gaja Gold

Gold Bridals

Gold Elements

Marigold

Sittare

You

Distar

GM Gold

These are some of the brand collections of GAJA.

The company was assigned 'SE1A' rating by CRISIL for SMEs in November 2008 which

indicates 'Highest performance capacity and highest financial strength'.

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Financials Results 12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY10 FY11 FY12E FY13E

Description 12m 12m 12m 12m

Net Sales 29558.38 52543.00 60424.45 68279.63

Other Income 3.86 36.50 37.23 39.09

Total Income 29562.24 52579.50 60461.68 68318.72

Expenditure -27482.23 -49149.70 -56315.59 -63636.61

Operating Profit 2080.01 3429.80 4146.09 4682.11

Interest -313.95 -709.40 -962.01 -1050.52

Gross profit 1766.06 2720.40 3184.08 3631.59

Depreciation -23.20 -59.80 -89.70 -103.16

Profit Before Tax 1742.86 2660.60 3094.38 3528.43

Tax -59.87 -22.10 -30.94 -35.28

Net Profit 1682.99 2638.50 3063.43 3493.15

Equity capital 485.46 606.80 606.80 606.80

Reserves 4881.10 7519.60 10583.03 14076.18

Face Value 10.00 10.00 10.00 10.00

Total No. of Shares 48.55 60.68 60.68 60.68

EPS 34.67 43.48 50.49 57.57

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Sep-10 31-Dec-10 31-Mar-11 30-Jun-11E

Description 3m 3m 3m 3m

Net sales 17891.40 11194.80 11075.30 12736.60

Other income 10.70 7.10 6.70 6.30

Total Income 17902.10 11201.90 11082.00 12742.89

Expenditure -16900.70 -10331.90 -10307.60 -11895.98

Operating profit 1001.40 870.00 774.40 846.91

Interest -150.30 -169.20 -262.80 -289.08

Gross profit 851.10 700.80 511.60 557.83

Depreciation -7.50 -13.70 -31.80 -33.71

Profit Before Tax 843.60 687.10 479.80 524.13

Tax -1.50 -4.20 -3.60 -10.48

Net Profit 842.10 682.90 476.20 513.64

Equity capital 606.80 606.80 606.80 606.80

Face Value 10.00 10.00 10.00 10.00

Total No. of Shares 60.68 60.68 60.68 60.68

EPS 13.88 11.25 7.85 8.46

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Key Ratio

Particulars FY10 FY11 FY12 E FY13 E

EBIDTA % 7% 7% 7% 7%

PAT % 6% 5% 5% 5%

P/E ratio (x) 7.50 5.98 5.15 4.51

ROE - % 31% 32% 27% 24%

ROCE - % 23% 29% 27% 24%

EV/EBIDITA (x) 6.07 4.60 4.26 4.21

Debt Equity Ratio 0.65 0.45 0.34 0.28

Book Value (Rs.) 110.55 133.92 184.41 241.97

Price/Book Value 2.35 1.94 1.41 1.07

Charts:

• Net sales & PAT

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• P/E Ratio (x)

• P/BV (X)

10

• EV/EBITDA(X)

Outlook and Conclusion

At the current market price of Rs.259.90, the stock is trading at 5.15 x FY12E

and 4.51 x FY13E respectively.

Earning per share (EPS) of the company for the earnings for FY12E and FY13E

is seen at Rs.50.49 and Rs.57.57 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 32% and

28% over 2010 to 2013E respectively.

On the basis of EV/EBITDA, the stock trades at 4.26 x for FY12E and 4.21 x for

FY13E.

Price to Book Value of the stock is expected to be at 1.41 x and 1.07 x

respectively for FY12E and FY13E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.294.00 for Medium to Long term investment.

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Industry Overview

Gems and Jewellery

Gems and Jewellery form an integral part of Indian tradition. A legacy passed from one

generation to another. The components of jewellery include not only traditional gold

but also diamond, platinum accompanied by a variety of precious and semi-precious

stones.

The Indian gems and jewellery market is set to cross US$ 26 billion by 2012, on the

back of improving lifestyle and availability of skilled labour, as per a report ‘Indian

Gems and Jewellery Market – Future Prospects to 2011’, by RNCOS.

India, the largest consumer and importer of gold in the world, is projected to import

around 500-550 tonnes of gold in 2010, as per AnjaniSinha, head of the Indian

Bullion Market Association (IBMA).

As per the credit rating agency Crisil, the diamond industry in India is predicted to

remain stable during 2010-11 due to improved prices and steady demand.

The Gem and Jewellery Export Promotion Council (GJEPC) predicts that the gems and

jewellery exports would witness a rise of around 5 per cent year-on-year during FY11.

Industry Structure

Although, the market is highly dominated by the unorganised players, with increase in

consumer income and economic prosperity, the future of organised retail in India is

very bright. The braded jewellery sector is estimated to reach US$ 2.2 billion by 2010

on the back of quality consciousness among target consumers, as per a McKinsey

report.

The Gem and Jewellery Export Promotion Council's (GJEPC) performance figures for

the financial year 2009-10 showcased the true resilience of the Indian industry over

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the last year whence it continued with its consistent plans of building trading relations

and penetrating newer markets.

In its bid to enhance the market strategy, a gems and jewellery special economic zone

(SEZ) sprawling over 40 acres with an investment of US$ 441.1 million is being

planned to be set up by Gold Souk, the jewellery mall developer. The company plans to

have residential apartments named Gold Souk City, apart from having gems and

jewellery manufacturers from Thailand and Dubai who will open their units in India.

Total net imports of gems and jewellery in April 2009- June 2010, touched US$ 81.08

billion (provisional figures) as compared to US$ 56.43 billion posed in the

corresponding period in the previous year, according to GJEPC.

Gold

India is one of the largest bullion markets in the world. It has been until now, the

undisputed single-largest Gold bullion consumer.

Gold imports stood at 739 tonnes during April 2009-March 2010. According to

SanjivBatra, Chairman and Managing Director, MMTC Ltd - the country's top gold

importer, stated that the company is likely to import 200 tonnes of the precious metal

in the current fiscal year.

The net imports of gold bars during April-June 2010 was estimated at US$ 11.36

billion (provisional), ascompared to US$ 16.66 billion the first quarter of last fiscal.

In the world official gold holdings ratings, India stood at 11th position with 557.7

tonnes of gold reserve as of June 2010, as per the World Gold Council.

India is the largest consumer of gold jewellery in the world, accounting for about 20

per cent of global gold consumption.

According to a release by the World Gold Council, during the first quarter of 2010

(Jan-Mar) India was ranked as the strongest performing market on the back of

increase in consumer demand. The country registered an increase of 698 per cent to

193.5 tonnes.

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Diamond

India is the world's largest diamond cutting and polishing centre in the world.

Surat is India's diamond processing hub, contributing over 80 per cent of the

country's diamond processing industry with annual revenue of around US$ 13.03

billion.

India is the world's largest diamond cutting and polishing centre in the world. It

accounts for 60 per cent value share, 82 per cent by carats and 95 per cent share of

the world market by number of pieces.It is the third largest consumer of polished

diamonds after the US and Japan.

Platinum

Due to the increasing gold prices, platinum jewellery has gained momentum in the

past few years not only worldwide but also in India. As per the Platinum Guild

International (India), the number of outlets selling platinum jewellery increased from

12 in 2000-01 to over 300 currently. It is predicted that the number of outlets selling

platinum jewellery would increase to around 1,000 outlets in the next 2-3 years. Most

platinum jewellery manufacturers are targettingconsumers in the age group 20-40

years with high disposable income.

Costume Jewellery

The Indian costume jewellery market is also witnessing growth in the international

market, as per the Export Promotion Council for Handicrafts. The industry body

further stated that the Government is also working towards formulating an

international compliance code for manufacturing costume jewellery.

The currentglobal costume jewellery and accessories market is estimated at US$ 16.3

billion, of which India only exports around US$ 53 million, thereby, providing a huge

opportunity area for the Indian costume manufacturers.

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Exports

Exports rose to US$ 8.89 billion during April-June 2010 from US$ 5.3 billion in the

corresponding period last year, registering 67.6 per cent growth in the total gem and

jewellery exports, as per data released by the Gem and Jewellery Export Promotion

Council (GJEPC).

The figures for export of gold jewelleryin June 2010stood at US$ 610.40 million

representing a growth of 39.6per cent as compared to US$ 437.24 million in June

2009.

The export of coloured gemstones stood at US$ 60.88 million reflecting a growth of

5.22 per cent in April-June 2010 as compared to US$ 57.86 million during the same

period last year. During June 2010, US$ 23.94 million worth of coloured gemstones

were exported.

The rough diamond exports stood at US$ 247.94 million whereas the cut and polished

diamond exports posted a growth of 85.37 per cent with US$ 5.9 billion worth of

exportsduring the first quarter of 2010-11. In June 2010 itself, cut and polished

diamond exports stood at US$ 2.2 billion.

Government Initiatives

In order to open a new avenue for the bullion trader community with improved trading

practices and increased delivery centres, the recent strategic tie-up between Bombay

Bullion Association (BBA) and Indian Commodity Exchange Ltd (ICEX) has opened an

avenue to harness the huge investment potential lying with the small and the

unorganised players. It further offers membership to all the BBA members. It further,

jointly deepens the markets in order to encourage wider participation, by providing

multiple delivery centres across the country by leveraging on MMTC's and BBA's pan-

India network. BBA will be an important stake holder in exchange's efforts in

strengthening the delivery infrastructure and also in launching customised contracts

suited to requirements of Indian markets.

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In a move to boost the industry, the government has formulated new rules for faster

clearance of import and export consignments of specific goods including jewellery and

gems.

Furthermore, the government has incorporated some other measures like providing

interest subvention of 2 per cent to labour intensive export sectors and duty drawback

facilities, in order to promote gems and jewellery export.

The Road Ahead

The country-specific trade centre of India, the India Trade and Exhibition Centre

(ITEC), will start functioning in Sharjah from October 2010. ITEC will be a one-stop-

shop for Indian businessmen and small and medium enterprises (SMEs), which will

assist them to explore potential markets and opportunities in the UAE, Gulf

Cooperation Council (GCC) nations, the Middle East and North African region. ITEC

will organise exhibitions every month till June next year with focus on gems and

jewellery being showcased in April 2011. The exhibitors who will showcase their

products in these exhibitions will be organised through the export promotion council.

The Gems and Jewellery Export Promotion Council has initiated IIJS Signature to

promote India as the preferred source for jewellery and eventually build Brand India.

Signature was conceptualised to showcase India's ability to produce quality jewellery

that will match the lifestyle trends world over.

GJEPC hosted IIJS Mumbai 2010 considered to be the largest jewellery show in Asiain

August, 2010 to highlight India's capabilities to manufacture jewellery in terms of

design, craftsmanship and quality at par with international centres and also to foster

relations with other markets around the world.

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should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

17

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