Radhika Jeweltech Ltd2.pdf - Girish personal

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SHARE INDIA SECURITIES LIMITED RADHIKA JEWLTECH LTD September 2022 Solid quarterly results, new showroom opening would VALUE PARAMETERS drive the growth… Face Value (Rs.) 10 Our Recommendation: Radhika Jeweltech presented robust sales Mrk.Cap (Rs. in Cr) 352 and earning numbers despite sharp increase in gold price due to 52-Week High/Low 201/51.9 Russia-Ukraine crisis. The upcoming 10,000 sqft showroom in Rajkot's EPS (TTM) 14.6 upmarket will be key growth driver in near-to-midterm. This showroom will increase company’s retail space 5x. The company is P/E Ratio (TTM) 10.2 also increasing online marketing to reach out to the new generation Book Value per share (Rs) 79.7 target audience. Increased portion of customized jewelry in revenue Industry P/E 35.7 will aid future profitability. The stock currently trades at an attractive P/B Ratio (calc at CMP) 1.88 valuation of 10x EPS and 1.88x its book value. Given these scenarios, we recommend BUY in price range Rs. 140-150 with target price Rs Dividend Yield (%) 0.70 200. Enterprise value (Rs in Cr) 331 Investment Rationale: About Company: Radhika Jeweltech Limited is a well-known retail jewelry company that specializes in fine gold jewelry and diamond SHAREHOLDING PATTERN studded jewelry. Radhika Jeweltech has grown rapidly since its inception, from a small shop in Rajkot's Soni bazar to a massive showroom of 2500 sq. ft., which is now located on Rajkot's Palace Road. The company has served over 20 lakh customers since its inception. The company employs 45 people, more than 35 of whom are involved in sales. 34.75 Promotors The staff is multilingual and has extensive experience dealing with customers as well as knowledge of gold jewelry. Gold jewelry (BIS DIIs Hallmark), Diamond jewelry and customized jewelry are the main 63.65 Public segments. 1.59 Q1FY23 Results: Company reported robust performance aided by higher gross margins and operating leverage.  Revenue grew by 168% YoY to Rs. 61 crore that was Rs. 22.74 crore in Q1FY22. Sequentially, revenue grew by 14.7% from Rs. 53.14 in previous quarter (Q4FY22).  EBITDA increased by 322% YoY to Rs. 13.09 crore which was Rs. FINANCIAL PERFORMANCE 3.10 crore in a year-ago-period. Sequentially, EBITDA grew by FY22 FY23E FY24E 106% from Rs. 6.36 crore. 232.78 431.5 580.2  EBITDA margin expanded by 780 bps y-o-y and 949 bps to Sales (Rs. Cr) 21.5% in 1QFY23. Growth in EBITDA and EBITDA margin is Growth (%) 69.4% 85.80% 34.46% attributable to a higher gross margin and operating leverage. Expenditures 197.53 366 490  PAT increased by 270% YoY basis to Rs. 10.21 crore. EBITDA ( Rs. Cr) 35.25 65.5 90.2 Sequentially, PAT grew by 129% from Rs 4.44 crores. EBITDA margin 15% 15.18% 15.55% 50.5 70 Key Highlights: PAT (Rs. Cr) 27.07  The planned new showroom, which is expected to start PAT margin (%) 11.63 11.70% 12.06% contributing revenues by 3Q FY23, is the most important driver EPS (Rs) 11.47 22.1 30 of RJL's growth in the near-to-medium term.  The 10,000 sqft showroom in Rajkot's upmarket Kalawad Road S neighbourhood, serviced by 150 sales representatives, will increase the company's total retail space to 5x its current area, propelling RJL's revenues to a significantly higher trajectory.  To increase sales, Indian jewellery manufacturers are rethinking the brick-and-mortar business model and aiming to embrace an omni-channel strategy.  Increasing Online marketing to reach out to the new generation target audience.  Hoardings are placed strategically in entire Saurastra Region.  Customized jewelry contribution in revenue is increasing thereby contributing to higher profitability. Share India SHARE INDIA SECURITIES LIMITED Financials and Valuations Q1FY23 Quarterly financials, standalone (Rs in Cr) Y/E March Q1FY23 Q1FY22 YoY chng (%) Q4FY22 QoQ chng (%) Net Revenues 60.97 22.74 168.12% 53.14 14.73% EBITDA 13.09 3.10 322.26% 6.36 105.82% EBITDA margin (%) 21.5% 13.6% 780 bps 11.97% 949 bps PAT 10.21 2.76 270.00% 4.44 129.95% PAT Margin 16.75% 12.14% 461 bps 8.36% 839 bps EPS(INR) 4.33 1.17 270.09% 1.88 130.32% Balance Sheet, standalone (Rs. Cr) Y/E March FY19 FY20 FY21 FY22 Equity Share Capital 24 24 24 24 Share Warrants 0 0 0 0 Reserves & Surplus 103 114 140 164 Total Shareholder's Fund 127 138 164 188 L.T. Borrowings 49 24 24 0 Deffered tax liability 0 0 0 0 L.T. Trade pay 0 0 0 0 Other long term Liab. 0 0 0 0 L.T. Provisions 0 0 0 0 Non-Current Liabilities 49 24 24 0 S.T. Borrowings 0 0 0 22 S.T Trade pay 1 2 1 0 Other S.T. Liab. 1 1 0 1 S.T. Provisions 5 4 8 0 Current Liabilities 7 7 9 23 Minority Interest 0 0 0 0 Total Equity & Liability 182 168 198 211 Fixed assets 1 1 0 2 L.T. Investments 20 20 0 0 L.T. Loans & Adv. 0 0 0 0 Other L.T. Assets 0 0 0 5 Non-Current Assets 21 21 0 7 S.T. Investments 0 0 0 0 Inventories 110 119 134 162 Sundry Debtors 0 0 0 0 Cash & Bank 45 19 51 42 Others 6 9 11 1 Current Assets 161 147 196 205 Misc. Exp. not W/O 0 0 0 0 Total Assets 182 168 198 211 Share India SHARE INDIA SECURITIES LIMITED Income Statement, standalone (Rs. Cr) Y/E March FY19 FY20 FY21 FY22 Net Revenues 173.05 171.84 137.42 232.78 Expenditure 156.50 158.11 114.30 197.53 EBIDTA 16.55 13.73 23.12 35.25 EBITDA Margin (%) 10% 8% 17% 15% Depreciation 0.27 0.19 0.11 0.28 EBIT 16.28 13.54 23.01 34.97 Other Income 3.30 2.88 6.92 1.95 Interest 4.31 2.52 0.32 0.54 Exceptional items 0.00 0.00 0.00 0.00 PBT 15.27 13.90 29.61 36.38 Tax 6.86 1.10 6.98 9.31 PAT 8.41 12.80 22.63 27.07 Min Int. 0.00 0.00 0.00 0.00 Shares associates 0.00 0.00 0.00 0.00 Net Profit 8.41 12.80 22.63 27.07 Net Profit Margin 4.86% 7.45% 16.47% 11.63% EPS 3.56 5.43 9.58 11.47 Cash Flow Statement, Standalone (Rs. Cr) Y/E: March FY19 FY20 FY21 FY22 PROFIT BEFORE TAX 15.27 13.91 33.45 36.37 Net CashFlow From Operating Activities -10.85 0.41 6.68 -4.1 Net Cash Used In Investing Activities 2.94 2.54 26.58 0.09 Net Cash Used From Financing Activities -14.84 -29.23 -0.52 -5.05 Foreign Exchange Gains / Losses 0 0 0 0 Adjustments On Amalgamation Merger Demerger Others 0 0 0 0 NET INC./DEC. IN CASH AND CASH EQUIVALENTS -22.75 -26.28 32.74 -9.05 Beginning Cash Balance 67.54 44.8 18.52 51.25 Ending Cash Balance 44.8 18.52 51.25 42.2 Key Ratios Y/E March FY2019 FY2020 FY2021 FY2022 Per Share Data (Rs) EPS 3.56 5.43 10.81 11.47 BV/Share 53.66 58.48 69.29 79.69 DPS 0 0.5 0 0 Dividend Payout (%) 0 9.21 0 0 Valuation Ratios P/E 4.91 3.02 1.39 0 P/BV 0.33 0.28 0.22 2.18 EV/EBITDA 2.28 2.66 0.28 10.49 Return Ratios (%) ROE 6.87% 9.68% 16.92% 14.38% ROCE 11.20% 9.72% 19.31% 19.62% Leverage Ratio (x) Current Ratio 27.56 25.87 20.18 8.87 Net Debt/Equity 0.39 0.17 0.15 0.12 Quick Ratio 8.69 4.89 6.41 1.86 SHARE INDIA SECURITIES LIMITED Revenue (Cr) Trend EBITDA (Cr) & EBITDA Margin (%) 300 40 18% 17% 239.62 232.78 35 16% 250 15% 30 14% 200 173.05 171.84 12% 25 150 137.42 10% 20 9% 10% 8% 8% 100 15 6% 50 10 21.49 4% 16.55 13.74 23.12 35.25 0 5 2% FY18 FY19 FY20 FY21 FY22 0 0% PAT (Cr) & PAT Margin RoE & RoCE Trend 30 18% 40.00% 19.31% 16.47% 19.62% 11.47% 35.00% 16% 25 14% 30.00% 14.06% 20 12% 25.00% 11.20% 9.72% 10% 20.00% 16.92% 15 7.45% 14.38% 5% 8% 15.00% 10.46% 9.68% 10 4.86% 6% 6.87% 10.00% 4% 5 5.00% 11.75 8.41 12.8 22.63 27.07 2% 0.00% 0 0% FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 ROE ROCE EPS (Rs.) Trend Book Value Trend 90 79.69 90 79.69 80 80 69.22 69.22 70 70 59.64 59.64 60 53.66 60 53.66 50 50 40 40 30 30 20 20 10 10 0 0 FY19 FY20 FY21 FY22 FY19 FY20 FY21 FY22 Share India SHARE INDIA SECURITIES LIMITED VP – Head Research - Dr. Ravi Singh Mob: +919810313561 Email ID: [email protected] Disclosure: We, research team at Share India Securities Ltd. (SISL), authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. SISL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. We state that Research Analyst or his/her relative or SISL may have any financial interest in the subject company. 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