Saturday, January 5, 2013
There was sharp appreciation in the price of gold in past few years.This is mainly due to a shift in asset allocation by individuals and countries in favor of gold at a time of financial turbulence around the glob.This unstoppable increase in gold prices forcing lower class and lower middle class people to look into cheap alternatives for the purpose of making ornaments / jewellery .This is not the trend only in our country but in many other places too.This situation improving the potential of another business – Imitation Jewellery. Beads is an important part of this business.This business is dominated by unorganised sector and there is only one listed company from this space – Banaras Beads which is manufacturing in manufacturing and exporting glass beads, imitation jewellery and other similar products.Banaras beads came out with an IPO in 1995 with a premium of Rs.75 per share. Thereafter there was some serious disputes between the promoter family members which ends in a series of court cases and intervention of company low board ( CLB).Trading of company’s stock suspended from stock exchanges from 2003 to 2011.During this period company’s growth severely affected and no dividend distributed.Now company almost settled the disputed and cancelled the allocation of about 30 lakhs shares issued to a group of family members according to the direction of CLB. From a turnover of Rs.15 Cr in 2007 company grown to a Rs.35 Cr in 2011-12.Now BBL is planning to tap the opportunities aggressively by expanding its design and production facilities ,finding new export channels ,entering into new territories ..etc.At present company exporting its products to about 60 countries including USA, Africa, Europe and Arabian countries.Company is now adding another 75000 Sq Ft facility ta Varanasi which is expected to complete in another few months.Recently company launched fashion jewellery items under the brand ‘De-Lemon’ and also launched an online shopping portal for Fashion Jewelery & accessories ( Link below).Even this industry is dominated by un organized players ,company’s like BBL having advantage of most modern designing facilities,adoption of contemporary styles,Image of brand ..etc. .FY 2011-12 was company’s first full year post re-listing .In FY 2011-12 ,BBL reported a sales of Rs.34 Cr , net profit of Rs.4.75 Cr and an EPS of Rs.7.10.Another point to note is its dividend pay out .Last year company declared a dividend of 40 % .On the basis of current market price this provided a dividend yield of 10% ( tax free) .I believe this was one of the highest dividend yields last year.We can’t guarantee this will repeat in future but there is possibility for the same since company is expected to complete this FY too with similar level of profit. Since company is running near its full capacity ,performance is expected to improve further with the functioning of new facilities by next year. End of long dispute at management level will help the company to concentrate in business from hereon and demand scenario for imitation jewellery is expected to pick up further.
Even this company’s stock listed in both stock exchanges it frequently traded only in BSE .Because of this low liquidity ,it is only suitable for those like high risk high profit kind bets and not for average risk takers.Invest only a very small portion of your corpus in these kind bets.BBL is trading at a price close to Rs.40 /-
Link to Company's online shopping portal HERE
Link to Company website HERE