Sagar Diamonds Ltd

Started in 2015, Sagar Diamonds Ltd is engaged in business of manufacturing and exporting of rough and polished diamonds. They are also engaged in the business of jewellery making and marketing. They sell a wide range of jewellery products including cut and polished diamond studded jewellery to diverse customer segments, from the value market to high-end customized jewellery. Their product range includes rings, chain, mangalsutra, earrings and necklaces, which are carefully handcrafted by skilled artisans. They have independent sales and distribution networks for their products. Most of their cut and polished diamonds are exported to diamond wholesalers and the jewellery manufacturers in the export markets. They procure diamond from suppliers at domestic and international market depending upon the needs and requirement. Company's manufacturing facility at their factory unit located in Sachin (S.E.Z), Gujarat having a total area of approximately 1,000 sq. ft. As on March 31, 2017, this facility had a capacity of Gold and Silver Jewellery of 35,000 gram per month. On performance front, for last two fiscals SDL has posted turnover/net profits(loss) of Rs 0 / Rs (0.002) cr. (FY16), Rs 9.99 cr. / Rs 0.34 cr. (FY17). Thus we have financials of only one FY. For period of 01-04-2017 to 20-06-17 company has shown turnover/net profits of Rs 10.01 / Rs 0.30  If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 47 plus. Last two fiscal’s average RoNW is 55.93%. Thus issue is highly priced and with only one FY results to check, prediction for future growth can't be done . As claimed by the management, it has no listed peers to compare with, but companies with common business segment is trading at P/E of 18.6. As per financials, issue is very highly priced and not enough financial data to predict growth. So we give AVOID rating to this SME IPO.

• 1  Mr. Vaibhav Dipak Shah
• 2  SG Diamonds LLP ('SG Diamonds' or 'SGD')