Jewellery stocks shine on bourses

Market analysts say the sector is attracting investors, as three companies - PCJ, TBZ and Tara Jewels - got listed in 2012

Gem and jewellery companies’ stocks are shining. The share price of Gitanjali Gems, Shree Ganesh Jewellery House and the recently listed Tara Jewels and P C Jeweller (PCJ) are trading near annual highs.

The jewellery retail business in India has been an unorganised sector, with around 85 per cent of the market controlled by regional and local entities. Market analysts say the sector is attracting investors, as three companies got listed in 2012. Tara Jewels and P C Jeweller were listed in December and another retailer, Tribhovandas Bhimji Zaveri (TBZ), had got listed in May last year.

While the share price of Titan and Gitanjali have risen around 40 per cent in a little over three months, TBZ’s has more than doubled since its initial public offer. PCJ rose 6.3 per cent on Wednesday, to Rs 175.5. Gitanjali Gems rose eight per cent, to close at Rs 585 on Wednesday on the Bombay Stock Exchange. Shree Ganesh Jewellery rose 5.8 per cent, to Rs 127. Tara Jewels touched a 52-week high of Rs 245 before it closed at Rs 237 on the BSE.
 

GOLDEN HUE Share price of major gem and jewellery firms on BSE
BSE price in Rs	Price 2-Jan-13	52-week High

  PriceDate Rajesh Exports138.95150.3526-Dec-12 Asian Star692.50944.959-Oct-12 Gitanjali Gems585.25607.952-Jan-13 Shree Ganesh Jewellery127.20132.808-Nov-12 Goenka Diamond & Jewels27.8531.2527-Nov-12 C Mahendra Exports89.95176.003-Apr-12 Tribhovandas Bhimji Zaveri*255.15301.0010-Dec-12 Tara Jewels*237.05245.452-Jan-13 PC Jeweller*175.50179.402-Jan-13 Compiled by BS Research Bureau                                            *All-time since listing

“Jewellery stocks are rallying as markets are finding it difficult to assess the correct valuation for these companies. Most jewellery companies show high inventory at the end of the financial year and valuation of these inventories is not based on any standard method of calculation, as gold and diamond jewellery does not have any standard valuation. Thus, top punters in the market are pushing up the share price of jewellery companies. If you see, none of the top five domestic mutual funds are investors in these companies and the valuations of the few jewellery companies look stretched,” said Ajay Pandey, assistant vice-president, institutional sales, at Intime Spectrum Securities.

Finance Minister P Chidambaram has said the government was considering raising the cost of gold imports, considered a key contributor to India's record current account deficit. Analysts say if the cost of gold imports go up, companies with inventory could benefit.

Retail jewellers’ business has been brisk in recent months due to the festive a nd wedding season. Jewellery houses are expanding their retail presence across the country, to cash on a rise in consumption across cities.