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BW Businessworld

Rajesh Exports: All That Glitters...

Photo Credit :

For its 10-year return performance, Bangalore-based Rajesh Exports (REL) gets a gold medal. The company, which manufactures and exports gold jewellery, has thrown up impressive numbers — on an adjusted share price basis, the stock's value has gone up to 61 times its price in 2003. Compare that to the benchmark Nifty 50, which went up about four-and-a-half times during that period.

Export houses usually do not get the kind of research or analyst coverage that other companies with similar revenues do. At over

Rs 20,000 crore (about $4 billion), that's not a small number. "It is hard to develop a basis for valuing such a stock," says one analyst from a leading financial services company.

Rajesh Mehta,Executive Chairman, Rajesh Mehta
(BW Pic By Jagadeesh N.V.)

REL's performance has been due to the domestic demand for jewellery. The company has 71 exclusive retail outlets across Karnataka alone. Also, it seems to have managed its overseas exposure well with a sound hedging strategy. It has not speculated in foreign currency markets or dealt in exotic derivatives.

No doubt,the fascination for buying gold continues; even on a one-year return basis, REL ranks fifth in our survey. While the benchmark returned 9.23 per cent, the stock returned over 20 per cent. Among jewellery export companies and trading houses, REL is the gold standard.

(This story was published in Businessworld Issue Dated 28-05-2012)