Can Lypsa Gems and Jewellery be a multibagger stock and is it worth a buy now.
Let us look at the fundamentals of Lypsa Gems and Jewellery and then decide whether the stock has the capability to give multibagger profits to investors who buy it now.
According to a research report by NVS Wealth Managers, the stock is a must-buy now and has the potential to give multibagger gains.
Lypsa Gems and Jewellery Ltd (Lypsa) is a company promoted by Mr. Dipan Patwa. It was established in the year 1992 and was listed on BSE in the year 2012. It is engaged in the business of trading, importing, exporting, making and polishing activities of diamonds, gems and other precious stones and has recently forayed into retail of diamond jewellery. The company has a capacity of 87,500 stones per month which equals around 5,200 carats of rough diamonds which in turn is equal to around 2,000 carats of polished diamonds per month.
Lypsa buys diamonds from Antwerp, Dubai and Moscow. It caters to small and mid-level diamond manufacturers based in Mumbai and Gujarat. Most of the company’s rough and polished diamonds output is exported to USA, Belgium, Israel, UAE and Hong Kong. Lypsa has its manufacturing facility at Palanpur, Gujarat. The company has two brands – “Oropel” and “Atelier”.
After undergoing the volatile downward trend in diamond market in last 3-4 years, Lypsa management has adopted a new strategy to expand its horizon of business and focus on high margin profitability growth with presence across value chain through rough trading and jewellery business along with various e-commerce platforms against the earlier strategy of large volume driven business with lower margins. This strategy would increase the profitability and margins, enable better utilization of working capital, have a debt light position and should become debt free by FY2017.
Lypsa is entering diamond jewellery segment with 2 prong strategy of capturing the aspirational needs of large middle class population segment in India by having the diamond jewellery in the range of Rs. 7,500 to Rs. 35,000 and on the other hand positioning itself on the comperatively higher segment for the higher income group where the prices range from Rs. 50,000 to Rs. 250,000 per jewellery.
If the plan of action as mentioned above are well implemented by the management, Lypsa would grow at a CAGR of 15 – 18% in next 4 – 5 years with topline reaching around Rs. 500 cr and a PAT of around Rs. 45-50 cr by FY2021.
This offers an attractive investment opportunity and investors can look for a steady growth in their investment. The stock can also become a multibagger if the fancy for gem and jewellery stocks comes back into the market.