Stock Idea - Rajesh Exports.

Scrip: - Rajesh Exports
BSE Code: - 531500
CMP: - 24.95
52 Week H/L: - 168.30 - 18.55
Sensex at : - 10337.68
Nifty at: - 3,043.85
Buy around: - 21.10Rs/-
Target : - 100 ( Within 2 yrs )

Summary: -
Rajesh Exports is involved is business of exporting gold and diamond cutting. Recently this stock has hammered due to weakening rupee. Dollar has appreciated at Rs 50 which comes to 40 months low. The second reason why it came down is Gold from 14 K sliped to10.8K.
Rajesh Export now the largest established private gold buyer, accounting for 1.2% of the global gold trade. Having attained this scale of operation, the company is now shifting its focus to find ways of increasing its net profit margin.
In order to meet its objective of increasing its net profit margin, Rajesh Exports has identified three major divers of growth:
Jewellery retailing: increasing presence across value chain by catering to different segments of consumer needs
Diamond jewellery: expanding product range with higher margins
White labels: expanding its market by supplying white labels to retail chain stores across the world.

Result: -
Rajesh Exports net declined 51.18 Percent to Rs 26.48 crore in Qtr ending September 2008 for the financial year 2008-2009 Compared to Rs 54.24 crore in qtr ending September 2007. Sales rose 20.94 Percent to Rs 2472.35 crore in Qtr ending September 2008 for the financial year 2008-2009 Compared to Rs 2044.21 crore in qtr ending September 2007. This has now become one of the key concern for the company.

The Real Estate: - Rajesh Exports has about four million sq.ft. land in Bangalore and Kerala. It is now planning to develop these properties and acquire competence in property development by setting up a 100% subsidiary, Bangalore Infra. The company may look at property development as a separate business in future.

Calculations: - Calculating all the above points and the real estate it has the Market cap should be the double of what it is now. So the stock prices will give 100 - 200 % returns in 1 Year.

Positive Factors: -
World’s largest gold exporter at lowest cost.
Stock is currently trading at low valuations.
Big order book.
Foreign investors increased their stake by 10% .
FIIs bought this stock at around Rs 95 then why should you wait to grab this stock at Rs 25.

Key Concerns: - Continued volatility in gold prices and adverse market conditions have forced Rajesh Exports, India’s leading gold and diamond manufacturer to go slow on its retail expansion plans.

The 100 Shubh stores which were expected to be rolled out by FY09, has been reduced to 40 due to continued volatility in gold prices and adverse market conditions. It is not expanding its Laabh stores either, and would keep the number of stores at a 30 in
FY09.

However, the growth in bulk business to Middle East would compensate for the loss of growth in retail, according to company sources.

The company expects its other businesses of bulk exports,white labels and diamond jewellery to more than compensate for the slowdown in its retail division.

The slowdown in its retail business is likely to affect its overall financial performance.

The net has declined so there is a cause to worry.

The Real Multibagger.
Happy Investing!
More on Rajesh Exports Here.