Gitanjali Gems is sparkling bright

Gitanjali Gems is sparkling bright after a long time. The stock rose almost 10% a few minutes after opening bell at Rs.68.85 and now is traded at Rs.67 levels thus remaining firmly in the green. Its 52-week high is at Rs.93.60.

The company informed the stock exchanges late evening yesterday that its subsidiary is going for an IPO. It said that Nakshatra World Limited ('NWL') [formerly known as Gitanjali Brands Limited], a wholly owned subsidiary of Gitanjali Gems has decided to raise funds through an IPO, for an overall amount of not exceeding Rs. 650 crore.

Yesterday, its Board approved this IPO and agreed for dilution of stake. The Draft Red Herring Prospectus (DRHP) will be filed by NWL with the SEBI soon. A subsidiary going for an IPO, naturally the existing shareholders are happy as the company is creating more value and there is hope that they will got some preferential allotment during the IPO.

The company also declared its Q2FY17 performance yesterday and thanks to the 57% rise in other income, tax write backs to the tune of Rs.12 crore, it ended the quarter with a consolidated net profit at Rs.47 crore, up 47% on a 15% rise in net sales at Rs.3965 crore.

Costs rose 16% and EBITDA at Rs.201 crore showed a 6% decline. Margins too fell from 6.16% to 5.07%. The company’s interest outgo for H1FY17 is over Rs.30 crore. Its total borrowings currently stands at Rs.5500 crore and cash is at Rs.141 crore.