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Diamond stocks in limelight

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Industry growth, festival season hustle up these stocks

Shailesh Menon

Mumbai, Aug. 29

Shares of major diamond processing and trading companies are "glittering" on robust industry growth and festival season hustle.

Stocks of Goldiam International, Gitanjali Gems, Classic Diamonds and Su-raj Diamonds have gone up ranging between 12 per cent and 78 per cent over the last one month.

Gitanjali Gems have gone up 77.59 per cent over the July 28 quote of Rs 112.25 to Rs 199.30 on the BSE and 4.98 per cent on Tuesday.

"We are looking at both organic and inorganic route to grow our international retail business and are also focusing on the diamond-studded jewellery segment. The polishing segment is also growing at a steady pace," said a director at Gitanjali Gems. The company expects branded exports to cross Rs 100 crore this year and plans to infuse funds into its international operations this fiscal. Gitanjali Gems is also planning to introduce 150 exclusive counters in shops and 70 stand-alone stores outside India.

Goldiam International gained 11.62 per cent month-on-month. "The industry is passing through a very stable period. Exports to the US and Europe have gone up considerably and the demand for Indian small diamonds has increased in emerging markets like Australia, Japan and the Gulf. The industry will do better as pre-Christmas sales have already begun in these markets," said Mr Rashesh M. Bhansali, Managing Director, Goldiam International.

Massive retail expansion plans have catapulted the stock prices of Classic Diamonds. Classic Diamonds has plans to start 15 retailing outlets across India. The stock has also been driven up by unconfirmed reports of tie-ups with international retail chains such as Wal-Mart, JC Penny's and Fred Myers.

Su-raj Diamonds has specific plans for catering to the domestic festival season. The company's subsidiary arm, "Forever Precious," will market diamond-studded jewellery across the country. Su-raj has also tied-up with Pantaloon Big Bazaar Retail for showcasing its product line. The company plans to come out with a signature collection.

Shares of Su-raj Diamonds climbed by 23.41 per cent to end Tuesday's trading on the BSE at Rs 58.25 (up by 0.73 per cent). Riding an expansion spree down south, stock prices of Rajesh Exports have risen by 38.67 per cent over the month. Shares of the company traded at Rs 178.40, up 4.39 per cent, on the BSE on Tuesday.

Pitfalls Galore

"Diamond stocks are volatile by nature. The trust-levels being low, SEBI is closely tracking these stocks. This is definitely not a good option for long term investments," said a market analyst with a leading brokerage.

(This article was published in the Business Line print edition dated August 30, 2006)
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