GICS Industry : Text., App. & Luxury Goods | Sub Industry : App., Acc. & Luxury Goods | Website : www.atlasjewelleryindia.com Atlas Jewellery India Limited Report Date: 30 Mar 2016 Key Stock Indicators BSE Ticker : 514394 CMP as on 28 Mar 2016­Rs/share : 20.4 Shares outstanding (mn) : 100.7 Bloomberg Ticker : AJLI:IN 52 week range up to 28 Mar 2016 (Rs)(H/L) : 101.7/15.9 Free Float (%) : 48.7 Face value per share : 10.0 Market Cap as on 28 Mar 2016 (Rs mn) : 2,048 Average daily volumes (12 months) : 3,047 Div.Yield (%): 0.0 Enterprise Value as on 28 Mar 2016 (Rs mn) : 2,033 Beta : 1.0 Background Key Financial & Valuation Indicators Incorporated in 1989, Atlas Jewellery India Limited (AJIL) is an exporter of gold jewellery and MAR­13 MAR­14 MAR­15 domestic retail trader of gold jewellery and other precious metal ornaments. The company Revenue (Rs mn) 0 730 2,006 exports its products to the Middle East. PAT (Rs mn) 0 16 32 EPS (Rs/share) 0.2 0.3 The group is promoted by Dr. M.M. Ramachandran. Formerly Gee El Woollens Limited, the PE (x) 173.4 266.1 company changed its name to Atlas Jewellery India Limited in August 2013. P/BV (x) 91.5 3.9 4.9 RoE (%) ­ 4.3 2.6 Its broad business areas include gold jewellery and diamond jewellery, with the former being EV/EBITDA (x) n.m. 157.3 144.4 the dominant segment. The company has showrooms in India, stores in the Gulf Cooperation Source: Company, CRISIL Research | n.m. : Not meaningful. Council (GCC), and an online platform as well, with exports providing ~95% of revenue. Stock Performance vis­a­vis Market Key Highlights Returns (%) YTD 1­m 3­m 12­m New retail showrooms in South India Atlas Jewellery India ­77 2 16 ­75 Limited In 2015­16, the company has opened two retail showrooms at North Usman Road, Chennai, and Dispensary Road, Bengaluru, where demand for gold and jewellery items has been SENSEX ­12 9 ­4 ­11 traditionally high. 1) YTD returns are since Apr 1, 2015 to Mar 28, 2016. 2) 1­m, 3­m and 12­m returns are up to Mar 28, 2016 Showrooms in Bangalore and Mumbai Shareholding (As on December 31, 2015) In 2014­15, the company launched two showrooms in Bengaluru and Mumbai, in Phoenix City Market and Haware Infotech Park, respectively. Increase in paid­up capital The company has an authorised share capital of Rs 200 crores, and, in July 2014, it increased paid­up capital from Rs 50.65 crores to Rs 100.65 crores, with the promoter bringing in Rs 100 crores. Pledged shares (As on December 31, 2015) Key Risks As a % of promoter holding 0.0 As a % of total shares 0.0 ­Fluctuations in foreign exchange rates. ­Geographical concentration towards the Middle East. Share Price Chart (Indexed to 100) Source: BSE, CRISIL Research Page 1 Initiative of the BSE Investors’ Protection Fund Competitive Position Peer Comparison Atlas Jewellery India Goldiam International Shree Ganesh Jewellery House Swarnsarita Gems Limited Ltd. Limited Limited Mar­15 Mar­15 Mar­15 Mar­15 Revenue (Rs mn) 2,006 3,218 3,110 2,411 EBITDA margins (%) 2.9 8.9 47.8 2.4 PAT (Rs mn) 32 219 ­8,022 32 PAT margins (%) 1.6 6.8 ­258.0 1.3 Gearing (x) ­ 0.3 11.4 0.6 EPS (Rs/share) 0.3 8.8 ­111.6 1.5 PE (x) 266.1 2.5 n.m. 18.8 P/BV (x) 4.9 0.2 0.3 0.7 RoCE (%) 4.1 9.2 1.9 7.7 RoE (%) 2.6 8.3 n.m. 4.1 EV/EBITDA (x) 144.4 4.1 21.8 16.1 n.m: Not meaningful Source: Company, CRISIL Research Financial Profile Financial Performance Mar­13 Mar­14 Mar­15 Revenue (Rs mn) 0 730 2,006 Revenue surged 175% to Rs 2,006 mn in 2014­15 from Rs 730 mn in 2013­14, Revenue growth (%) ­ ­ 174.9 due to growth in gold jewellery exports to the Middle East. EBITDA (Rs mn) 0 18 58 EBITDA growth (%) n.m. n.m. 227.5 EBITDA increased to Rs 58 mn in 2014­15, from Rs 18 mn in 2013­14, and EBITDA margins (%) ­ 2.4 2.9 EBITDA margin improved slightly to 2.9% from 2.4%. PAT (Rs mn) 0 16 32 PAT growth (%) n.m. n.m. 95.7 Driven by increase in EBITDA, PAT grew almost doubled to Rs. 32 mn in 2014­15 PAT margins (%) ­ 2.2 1.6 from Rs 16 mn in 2013­14. Gearing (x) ­ ­ ­ RoCE (%) ­ 4.7 4.1 RoE (%) ­ 4.3 2.6 Source: Company, CRISIL Research Industry Outlook Gems and Jewellery The size of the domestic gems and jewellery industry is estimated at Rs 4,904 billion as of 2014­15. It is highly fragmented and dominated by the unorganised sector. Over the years, the share of diamond jewellery has increased, as a rise in disposable income has made diamond­studded jewellery slightly more affordable. However, gold still constitutes over 85% of domestic consumption. In exports, players not only face competition from other local peers, but also from players in other countries. Over the past three years, the industry has grown at about 3% CAGR, led by volumes, as gold prices have been falling (since 2013­14) due to declining investment demand. In 2015­16, domestic demand is expected to rise 6­8%, prompted by jewellery sales, whereas sales of gold bars and coins are expected to continue to lag. Exports are estimated to fall nearly 6% due to a steep decline in investment demand for gold and a fall in exports of cut and polished diamonds. However, a volume­led recovery in jewellery exports is likely to partially cushion the overall decline. Exporters' margins are likely to recover in 2015­16, powered by declining rough diamond prices and reduction in gold jewellery round­tripping. A decline in gold prices will also boost margins. However, domestic players' margins will remain under pressure, as companies will have to increase their marketing spending, with gold prices falling consistently. Annual Results Income statement Balance Sheet (Rs million) Mar­13 Mar­14 Mar­15 (Rs million) Mar­13 Mar­14 Mar­15 Net Sales 0 730 2,006 Equity share capital 43 550 1,007 Operating Income 0 730 2,006 Reserves and surplus ­25 177 705 Tangible net worth 18 728 1,712 EBITDA 0 18 58 Deferred tax liability:(asset) 0 0 ­1 EBITDA Margins (%) 0.0 2.4 2.9 Long­term debt 0 0 0 Short­term­debt 0 4 0 Depreciation 0 0 8 Total debt 0 4 0 Interest 0 0 3 Current liabilities 0 19 194 Other Income 0 0 0 Total provisions 0 0 2 Total liabilities 18 751 1,907 PBT 0 18 48 Gross block 0 0 67 PAT 0 16 32 Net fixed assets 0 0 138 Investments 0 0 0 PAT Margins (%) 0.0 2.2 1.6 Current assets 18 751 1,769 Receivables 0 723 1,405 No.of shares (mn no.) 101.0 101.0 101.0 Inventories 0 0 330 Cash 0 12 15 Earning per share (EPS) 0.2 0.3 Total assets 18 751 1,907 Cash flow Ratios (Rs million) Mar­13 Mar­14 Mar­15 Mar­13 Mar­14 Mar­15 Pre­tax Profit 0 18 48 Revenue growth (%) ­ ­ 174.9 Total tax paid 0 ­1 ­17 EBITDA growth (%) n.m. n.m. 227.5 Depreciation 0 0 8 PAT growth (%) n.m. n.m. 95.7 EBITDA margins (%) ­ 2.4 2.9 Change in working capital 3 ­702 ­838 Tax Rate (%) ­ 7.7 35.9 Cash flow from operating activities 3 ­685 ­799 PAT margins (%) ­ 2.2 1.6 Capital expenditure 0 0 ­146 Investments and others 0 0 0 Dividend payout (%) ­ ­ ­ Cash flow from investing activities 0 0 ­146 Dividend per share (Rs) ­ ­ ­ BV (Rs) 0.2 7.2 17.0 Equity raised/(repaid) 0 650 1,000 Return on Equity (%) ­ 4.3 2.6 Debt raised/(repaid) ­3 4 ­4 Return on Capital employed (%) ­ 4.7 4.1 Dividend (incl. tax) 0 0 0 Others (incl extraordinaries) ­1 43 ­47 Gearing (x) ­ ­ ­ Cash flow from financing activities ­4 697 949 Interest coverage (x) ­ 74.5 20.0 Debt/EBITDA (x) ­ 0.2 ­ Change in cash position ­1 12 4 Opening cash 0 0 12 Asset turnover (x) ­ 2066.3 59.1 Closing cash 0 12 15 Current ratio (x) ­4.4 39.9 9.0 n.m.: Not meaningful Gross current assets (days) 0 368 320 Source: Company, CRISIL Research Quarterly Results Profit and loss account QoQ YoY YTD YTD YoY (Rs million) Dec­14 Sep­15 Dec­15 Growth (%) Growth (%) Dec­14 Dec­15 Growth (%) No of Months 3 3 3 9 9 Revenue 17 48 22 ­54.1 29.4 1,757 119 ­93.2 EBITDA ­15 ­31 ­20 n.m. n.m. 66 ­72 n.m. Interest 1 0 0 ­ ­100.0 2 1 ­50.0 Depreciation 0 7 9 28.5 ­ 0 22 ­ PBT ­12 3 ­17 n.m. n.m. 69 ­18 n.m. PAT ­15 2 ­13 n.m. n.m. 39 ­14 n.m. Source: Company, CRISIL Research | n.m. : Not meaningful Focus Tables Board of Directors SN Director Name Designation SN Director Name Designation 1 Dr. M M Ramachandran Chairman 5 Mr. Shrirang Vasant Khadilkar Independent Director Mr.