RAJESH EXPORTS@CMP70, Target 200 in 1 Year

Rajesh exports is investor friendly company.. haveing a rich record of dividends... it is the largest exporter of India and count about 1.2% of total world Gold Export....





I recommend this stock at CMP 70 with a target of 200Rs in One Year....

http://www.bseindia.com/qresann/results.asp?scripcd=531500&scripname=Rajesh%20Exports%20Ltd&type=56&quarter=DQ2007-2008&ResType=&checkcons=

High earnings momentum
Since 1990, Rajesh Exports has focused its strengths on increasing revenue. This objective has been successful, as it is 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.

I expect the company's EPS to (fully diluted equity of Rs97m) grow at a CAGR of 50% from FY07 to FY10 - Rs38.2 in FY08, Rs60.7 in FY09 and Rs92.3 in FY10. In addition, the company will be developing its four million sq.ft. properties, the NAV of which is Rs188 per share.

Multiple drivers of growth
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


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.


Investment Risk
Delay in execution could have a significant impact
The company has been planning to rollout Shubh stores since the last two years, but it has been delayed due to prioritizations of Laabh stores rollout. Going forward, any delay in the execution will have a negative impact on the company's financials.
Management bandwidth
Retail store operations are being managed by professionals who were in the past associated with Tanishq and Oyzterbay. With more players entering jewellery retailing, there can be a risk of management exodus. This can have a serious risk on its retail operations.
Business model risk
The associate model of the Shubh stores is a novel concept, as the company would be acquiring some jewelers’ and partnering with them as associates. The company's inventory would be lying at associates' stores against the security of property and other liens. However, cases of fraudulent practices could mar the success of this model.

Happy Investing