Shree Ganesh Jewellery IPO fairly priced: Angel

MUMBAI: Angel Broking is of the view that the initial public offering of Shree Ganesh Jewellery House (SGJHL) is fairly priced as compared to peers. It has a ‘Neutral’ view on the IPO.

SGJHL is one of the largest manufacturers and exporters of handcrafted gold jewellery in India. It has entered the capital market with public issue of 1.43 crore shares in the price band of Rs 260-270 per share of face value of Rs 10 each.

“Over FY2007-09, SGJHL on a standalone basis reported robust revenue CAGR of 61.5%. The dual effect of capacity addition (resulting in higher production), coupled with rising prices of gold, enabled the company to clock such growth. On the EBITDA and PAT fronts as well, the company reported a robust CAGR of 49.7% and 61.4%, respectively, over FY2007-09, on a standalone basis. On a consolidated basis, SGJHL's revenues, EBIDTA and PAT surged by 95.9%, 24% and 51%, respectively, in FY2009.

"On the lower and upper end of the price band, the stock would quote at 9.4x and 9.7x its post-diluted FY2012E estimates, respectively. Considering the company's future plans like adding capacities, diversifying its product offerings, spreading its geographical presence, scaling-up its retail chain segment and setting-up of the gold refining facility, we believe that the company will benefit both in terms of top-line growth and operating margin improvement in the long-run. However, considering the peer valuations on FY2010E estimates, we believe that the stock is fairly priced. Hence, we recommend a Neutral view on the IPO,” the report said.

SGJHL plans to use the proceeds for adding capacities, diversifying its product offerings, spreading its geographical presence, scaling up its retail chain segment and setting up of a gold refining facility.