The shares of this jewelry company hit 5 percent upper circuit reaching an all-time 52-week high price of Rs 1,538.8 apiece as of today after the company announced the acquisition of jewelry firms for a value of Rs 49.98 crores.
With a market capitalization of Rs 1,940.04 crores, the shares of Sky Gold Ltd gained 5 percent and closed at Rs 1,538.85 a piece on Monday’s trading session.
According to the company’s stock exchange filings, the company announced that the board of directors of Sky Gold has approved the purchase of 100 percent equity shares of Starmangalsutra Private Limited and Sparkling Chains Private Limited.
Starmangalsutra Pvt. Ltd. specializes in the manufacturing of traditional and modern Mangalsutra jewelry while Sparkling Chains Private Limited focuses on chain jewelry made from gold, silver, and other precious metals.
The filings also mention that Sky Gold has acquired both the companies for Rs. 23.98 crores
and Rs. 26.00 crores respectively. The aggregate consideration of the acquisition is Rs. 49.98 crores. The acquisition will be carried out by issuing 4,17,542 equity shares at Rs 1,197 per piece, with a face value of Rs 10 per share to the current shareholders of Starmangalsutra Private Limited and Sparkling Chains Private Limited.
The company anticipates that this strategic move will increase the consolidated EBITDA margin by 50 to 75 percent from the current 4.4 percent in FY24. Along with this It also boost the firm’s PAT margin to 3 percent from the current 2.6 percent within the upcoming 12 to 18 months. The firms’ revenue also crossed Rs. 1,745.5 crores in FY24.
According to the stock exchange filings, With these acquisitions, Sky Gold aims to accelerate its plans to reach full capacity within 2 years post-merger. The company mentions that this move will help it achieve its revenue target of Rs 6,300 crores by FY27. Additionally, Sky Gold expects to gain economies of scale and reduce borrowing costs following the acquisition.
Mr. Mangesh Chauhan, the MD & CFO of Sky Gold Ltd commented on the acquisitions, stating, “The integration of Starmangalsutra and Sparkling Chains perfectly aligns with our growth objectives. These acquisitions are expected to enhance our margins through the combined synergies of the enterprise”
Reviewing the financials of Sky Gold from a year-on-year basis, the revenues rose by 51.21 percent from Rs 1,154 crores in FY22-23 to Rs 1,745 crores in FY23-24. In the same time frame, the net profits increased from Rs 19 crores to Rs 40 crores demonstrating a 110.5 percent increase.
In FY24, Sky Gold’s revenue was primarily from exports, accounting for 94 percent, while domestic sales contributed 6 percent. The company’s EBITDA increased by 95 percent from Rs 20.3 crores in FY22 to Rs 77.2 crores in FY24. During the same period, the Profit After Tax (PAT) Margin rose by 54 percent from Rs 17 crores to Rs 40.5 crores.
The firm’s clients include prominent brands such as Malabar Gold and Diamonds, Kalyan Jwellers, Jos Allukas, BHIMA, Josco Jwellers, etc. Sky Golds also exports to various countries such as Singapore, Malaysia, GCC countries, the UK, the US, Europe, Australia, and New Zealand.
The company has future plans to improve inventory management and working capital cycle. They also plan to continue to add new product categories and designs along with expansion to new geographies in order to drive sales.
The shares of this company generated a multi-bagger return of 466.46 percent over the past year and 52.27 percent over the past 6 months.
According to the latest shareholding pattern, Ace Investor Ashish Kacholia, entering the stock in March 2024, currently holds 4,04,116 equity shares equivalent to a 3.05 percent stake in this company. The current holding value of his investment amounts to Rs 62.2 crores.
As of March 2024, the firm’s shareholding pattern stood at 61.32 percent for promoters, 38.64 percent for the public, and 0.04 percent for foreign institutional investors.
Indian Brokerage firm Nuvama initiated a ‘buy’ recommendation on Sky Gold Ltd with a target price of Rs 1,818 per share, implying an upside potential of up to 18 percent from Monday’s closing price of Rs 1,538.85 a piece. The brokerage also forecasts a 55 percent revenue CAGR over FY24–26 which will be driven by higher volumes and exports, according to the research report.
Sky Gold Limited is engaged in the business of designing, manufacturing, and marketing gold jewellery. The company follows a B2B model where the products are mainly sold to mid-range jewelers and boutique stores that sell these products through online platforms and retail stores.
Written By Zahal
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