The Hindu Business Line : Su-Raj Diamonds shines on value buying

THE Su-Raj Diamonds counter retained its sparkle and activity on the bourses on Wednesday in the cum-dividend state. The stock finished at Rs 50.70, up 2.45 per cent, with a traded quantity of over 1.86 lakh shares on the NSE. On the BSE, it closed at Rs 51.90, a gain of 2.87 per cent.

The company recommended a dividend of 12 per cent for 2004-05 against 10 per cent in the previous year.

According to analysts, the growth in the stock's valuation has just begun. In 2004-05, it has reported a 40-per cent jump in net profit at Rs 30.68 crore. In the Q4 of 2004-05, it logged a net profit of Rs 8.22 crore. "With its new focus on retail for gems and jewellery and promises from the Centre for the diamond and jewellery exporters for greater official promotional incentives, the stock is poised for a re-rating," a fund manager observed.

The company is positioning itself in the retailing segment through its subsidiary and associate company - Su-Raj Diamond Dealers Ltd and Forever Precious Jewellery and Diamonds Ltd - in the domestic market. For the overseas market, its 2003-04 acquisition of Koradiam N.V. in Antwerp in Belgium is being used as jewellery retail face.

According to Mr Devarsh Vakil of Anagram Stockbroking, Su-Raj is expected to notch up significant profitability over the next 2-3 years on the back of impressive volume growth driven by booming domestic and overseas jewellery markets. The company is also expanding and upgrading its facilities at Goa and Bangalore for crucial export markets.It has a total of nine manufacturing units in the country.

According to the management, the company is likely to witness an annual average sales growth of around 35 per cent in the next three years.

The stock's 2004-05 EPS is Rs 7.7. At today's closing price, the stock traded at a P/E of 6.75. "If the company achieves its targeted growth, the 2006-07 EPS should move up to Rs 14, indicating a forward P/E of 3.7," Mr Vakil added.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Indecisive move

Sensex gains 70.88 points

Zodiac Clothing jumps on dividend, acquisition move

IndusInd Bank up on merger hopes

Su-Raj Diamonds shines on value buying

RBI okays FII buying in Apollo Hospital

Market recovers after initial hiccups

CIAL board okays maiden public issue

SPL IPO subscribed by 5.72 times