Rajesh Exports net up 10%

Rajesh Exports Ltd posted a 10 per cent jump in Q1 net profit and said it will add 34 Shubh Jewellery stores to its existing Karnataka portfolio, in the next two quarters. The company will now focus on Tier 2 and Tier 3 cities in the state, before expanding to other states in South India. The company posted a first-quarter net profit of Rs 108.12 crores in the quarter ended June 30, 2013 from Rs 98.3 crores when compared to the corresponding quarter last year. Total operating income climbed about 8 per cent to Rs 159.45 crores.

The net sales of Rajesh Exports rose about 11 per cent to Rs 5503.2 crores.

Helped by larger profitability of its retail initiative, Shubh Jewellers."The company would be further expanding its retail presence to the other three Southern States, and further to a pan Indian presence. The company also has plans to open 500 Shubh Jewellery showrooms by the year 2015," the jewellery maker said in a statement.

The company posted a first-quarter net profit of Rs 108.12 crores in the quarter ended June 30, 2013 from Rs 98.3 crores when compared to the corresponding quarter last year. Total operating income climbed about 8 per cent to Rs 159.45 crores.

The net sales of Rajesh Exports rose about 11 per cent to Rs 5503.2 crores, helped by larger profitability of its retail initiative, Shubh Jewellers.

The company's retail initiative, Shubh, was launched in mid 2010 and is currently only in the state of Karnataka. It contributes to about 10 per cent of the company's profit.

Among the three Southern States targeted by the company, Shubh is most likely to first set foot in Andhra Pradesh followed by Tamil Nadu, according to Siddharth Mehta, Chief Strategist, Rajesh Exports.

Mehta added the Indian government's decision to hike import duty on gold to 10 per cent from 8 per cent would not have a big impact on the firm, given their profits largely come from their jewellery export business.

"The Indian government is mainly increasing the import duty to decrease the import of gold for domestic market consumption which in turn helps them to control the CAD. But as Rajesh Exports main business (approx 90 per cent) is of exports this would not affect us in a big way."

However, in the Shubh jewellers customer will have to pay more as the company plans to pass on the higher cost to buyers.

"In our retail business, the additional duty would be loaded to the consumer as Rajesh Exports is already giving the consumer the most competitive price which if compared would be less by 15 to 20 per cent than any other jeweler," Mehta said

Shares of the company remained flat at Rs 102 each, at close Wednesday, on the BSE.