Rajesh Exports buys Valcambi : Will it benefit the stock

Rajesh Exports Limited (REL) headquartered in Bangalore, India manufactures gold & diamond jewellery. REL exports its products world wide and distributes them within India to the wholesale jewellery market. REL also retails its products through its own network of retail jewellery showrooms Shubh Jewellers spread across India.

"Rajesh Export Ltd's (REL) objective is to establish itself firmly as a leader in the global jewellery market by manufacturing and marketing the finest quality jewellery to consumers across the world. To achieve this objective REL will put in all required efforts and consequently emerge as a global leader in the field of jewellery"

Rajesh Exports is the world’s largest manufacturer of Gold Jewellery and also the world’s lowest cost jewellery producer. It is fully integrated from mining to retailing. Rajesh exports is India’s largest exporter of gold jewellery and has 82 retail outlets of SHUBH Jewellers.

Rajesh Exports has acquired Swiss based precious metals refiner Valcambi SA for $400 million. The deal is an all cash deal as per the company statement given to BSE on Monday.

Valcambi is a dividend paying company with consistent track record for good performance and has considerable cash surplus.

“The coming-together of REL (Rajesh Exports) and Valcambi will expand the global gold business and will prove very productive for the future plans of the REL group. This acquisition will add significantly to the revenues and profitability of the REL group in the coming years”, said Rajesh Mehta , Chairman of Rajesh Exports.

He further added “ We felt that to grow further , we need to increase our global footprint and also our backward integration. The acquisition has been part financed by Credit Suisse (30-35 percent) while the rest has been raised from internal accruals of the company.”

The Valcambi acquisition has been done through Rajesh Export’s Singapore subsidiary. REL Singapore subsidiary acquired European Gold Refineries Holding SA , the firm that holds a 100 percent stake in Valcambi. The acquisition is expected to create lot of synergies for REL and the company is expected to benefit from the acquisition.

Rajesh exports have been buzzing on bourses in near term. The stock is trading at a PE of 24.25 and its market capitalisation is 15946 Crore. The stock has delivered 232 percent returns in 1 year. On YTD basis the stock has given 280 percentage returns. On 3 years basis the stock has given 63 percent annualised returns