Sunday, April 09, 2006

Su-Raj Diamonds - a discussion

Su-raj Diamonds should explode at the bourses. Some reasons -
a) The scrip is at a fwdPE of 7.55
b) The NCAV of the stock is a good 97.60 rupees while the CMP is much lower at 64.15 (Apr 7th) - a true Grahamian stock !!!
c) Cash rich company with 26.50 rupees of cash per share
d) Has a dividend yield of almost 2% (which is a rarity these days)
e) The company also has investments of 43.21 crs on it's books

The growth in sales has been good and consistent ... 495 crs (FY02), 583 crs (FY03), 723 crs (FY04) and 1028 crs (FY05). The company would close at 1150 crs for this financial yr ... another rising sales yr. Likewise, growth in profits is at 10.97 crs, 12.11 crs, 21.89 crs and 30.69 crs over the last 4 yrs. I estimate the profits for FY06 to close at 34 crs.

Note, that the P/E ratio of Su-raj Diamonds is much lower than it's peers - Vaibhav Gems, Goldiam International, Rajesh Exports, Shrenuj & Co. etc.

However, Su-raj Diamonds has never moved much. Movement has largely been between the 50 rupees to 70 rupees range over the last one yr. Surprisingly, a number of analysts have given a thums up to the stock over the short and medium term. Here's one by ICICIDirect.

Is this stock worth investing in?

11 Comments:

Blogger Rakesh said...

Shankar,
Hope it does explode. I have 300 shares at avg price of Rs. 54.
-Rakesh

11:43 AM  
Blogger Shankar said...

Insha-allah, i wish it does. I bought some today .. at 65.00 rupees.

Rajesh Exports has done mighty well over the last month or so. It jumped from 180-odd to 330 levels. Currently at around 305.

Warm Rgds
Shankar

11:56 AM  
Anonymous Anonymous said...

Hi Shankar,

Your analysis seems to be incomplete as you have not taken debt figures in your analysis.
Against market cap of 258 crs it is carrying debt of 205 crs so the total enterprise value comes to huge 463 crs. When it has cash of 106 crs why not it is paying its debt? If its ROE is more than its cost of debt why it is not investing its money and keeping idle cash.
In comparison Goldiam is a purely debt free stock with huge cash and investment position and so it is rising snd not su-raj.(Also goldiam gets more benfitted by rise in gold unlike su-raj)

rgds,

Sudhir

4:23 PM  
Blogger Shankar said...

Good point, Sudhir. Exactly the same question i've asked - what is this cash of 26 rupees per share doing in the books, when it has a debt of 205 crs. True, need more analysis on the same ... (this was more of a 'what's-happening-here' post.

Thanks for the feedback

Warm Rgds
Shankar

4:38 PM  
Anonymous Anonymous said...

Yeah Shankar by discussing we can come out as better investors...

best rgds,

Sudhir

10:17 PM  
Blogger Shankar said...

:-) Well, Ive improved for one. Yesterday I picked up 5 shares. Made a cumulative of 6.7% in a single day. Howzzat !!!

Guess I owe this to Prasanth, Amol, Vishal, Ravi, Kiran etc. and for the many others who are in touch on email and phone.

7:25 PM  
Anonymous pey said...

Since you made a reference to Graham - does it have a moat wide enough?

11:22 AM  
Blogger Shankar said...

Graham would look at a stock whose CMP is 66% or lower than it's NCAV. In this case, Su-raj has an NCAV of 97.60. 66% of that is 65.06 rupees. CMP is 64.15. ... Good enough moat, i guess.

Warm Rgds
Shankar

11:29 AM  
Blogger Rakesh said...

Shankar,

It seems Bears have taken over the market sooner than I expected. 12K was my exit point. Next week will be critical.

-Rakesh

4:06 PM  
Anonymous sapphire said...

My wife is looking to upgrade her diamond ring on our 15th anniversarysapphireI'm surprised that time has gone so fast. I'm interested in any help on finding a good ring without losing all value, besides sentimental value, in first ring.sapphire

8:01 PM  
Anonymous Anonymous said...

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10:23 AM  

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