Fair Point. So far so good, they have walked the talk. What is the hurry to go past that talk is my concern. Just take the yesterdays revised declaration of the new acquisition. Why make these silly mistakes of giving multiple declarations with more disclosures. Correct me if i am wrong, are they required to give projections of SALES, OPM & PAT for the next 3 years a newly acquired company (GNG Pvt Ltd)
Disc : Invested
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I think its necessary due to unique business model of acquired company Ganna n Gold ltd.
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So what is this unique model?.
I have never seen an acquisition announcement with future expected turnover and PAT figures.
All the company announcements I have seen have always posted three years trailing revenues.
On a lighter noteā¦Research Analysts are running the company, hence future projectionsā¦
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In X, Go through the Posts of Kumar Saurabh Sir. He has disected the business model of Sky Gold. You will get your answer. Hopefully that helps.
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Hi ā¦can you please share the linkā¦thank you
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Will they able to maintain op margin if gold price comes down? What is the OPM of Emerald? How they are differentiated against Rajesh? Will they able to capture unorganised, since it is going to be their next leg of journey? As answered in concall, can they import gold, make value addn and export without paying duty?
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Very interesting questions ā¦ Krishna
Will they able to maintain op margin if gold price comes down? ā Most probably ā¦ with some minor damage
- Spread-driven Business: Gross profit comes from ā¹/gm making charges + design fees; bullion price is largely irrelevant.
- Hedged: All bullion is MCX-hedged, so price drops shrink revenue, not spreads.
- Pass-through: Major contracts re-price every 15 days, protecting margins.
OPM of Emerald? ā¦ Emerald is a leader but then we donāt have that information
How they are differentiated against Rajesh? At a high level ā¦ Rajesh is >80 % bullion refining/ trading; low-margin job-work jewellery
Will they able to capture unorganised?
- 40 regional chains (5ā15 stores) already on-boarded on advanced-gold termsāthe very players formalising.
- Navi Mumbai at ~45 % of 0.75 t/month + 0.20 t (Sparkling/Star) ā ample spare capacity
- 9ā18 ct lightweight SKUs from ā¹4-5k match small-retailer ticket sizes as GST drives formalisation
- Execution (collections, localised designs) remains the key risk, but strategy aligns with the move to organised retail
Can they import gold, make value addn and export without paying duty? No legal expertise here, but we feel this can happen.
Indiaās Customs framework lets jewellery manufacturers suspend (and later forego) basic customs duty (BCD 15 %), Social-Welfare Surcharge and IGST on imported gold provided the metal is re-exported in value-added form within specified timelines.
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I am finding it really difficult to find MOAT in this business. Given that high OPM jewellery segments like 18kt or studded designs are currently outsourced by larger players due to their minimal share, what prevents them from insourcing these designs over time, especially considering the relatively low capex required to set up such production, as Malabar is planning? If that shift occurs, wouldnāt it significantly erode the competitive edge specialized manufacturers relying on this outsourcing model or dent their OPM?
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Stock hits lower circuit (5%) as Promoters are selling stakes to let mutual funds and private equities to enter the stock.
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I feel that the underlying economics of the business is completely intact and the growth prospects are also intact, so this is just Mr.Market being a sad depressed Maniac to offer us potential opportunities which we should look at accordingly.
Disclosure: Invested
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Agreed.
A number of MFs bought it yesterday. Doesnāt seem like a problem.
Disc: Invested
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Sale by promoters per say is not unique to SG especially when markets are high and they need money for personal needs. However in case of SG, this has come unexpected. Barely 15 days back management was gung-ho about the prospects and wanted to make SG the manufacturing power house. They should have managed this sale proactively and informed the investors. Because of negative cash flows/inventory issues, the investors are rightly circumspect about the whole episode. To make things worse, management has made its life difficult by revising guidance upwards (there was no need for it), frequent analyst calls, social media buzz (linkdn). Worse retail jewelry demand going down (high gold prices) will might impact SG in achieving the guidance. Overall sale by promoters was ill timed. Hope there was no other reason or motive for sale other than buying a big property in SOBO for personal use.
Invested
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I donāt think any promoter would inform the market before selling. It hardly matters if promoters sells 3.5% to private informed investors. They still hold 55%. Gold demand weak or strong- I think itās now upto the management of they can deliver what they have promised.
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Promoter reply on stake sale
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All the 3 promoters who have sold their stake to MF houses have exercised conversion of warrant to share at the price of 1,017/- per share.
This would increase the equity capital from 146 Cr to 148 Cr.
Looks like a positive signal to me as this shows promoterās faith in the company and business model.
Disclosure: Invested
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Quick query here, the conversion price of 1017/share is for shares before the split (FV 10/sh).
So the effective price for warrents is just 102/share?
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Interviewed Promoter of Sky Gold
Disclosure: Not Inv
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