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Tuesday, July 9, 2013

Gitanjali Gems Ltd:-Whats in store for the retail investors?

Scripscan:Gitanjali Gems Ltd
Traded in:Nse-Bse

Story:This is one company where I invested and recommended at 180 bucks,during the 2010 time.Cheap valuations and expected price rise in gold, helped me to pick and suggest the counter.The target price was 252 which it subsequently achieved in that period.I am not in a mood to pen analysis and valuations here.As a passionate retail investor, am putting some stuff rather questions down.Heartfelt condolences for the investors of Gitanjali gems.Oblivious to the complexities of stock market,this horrendous fall is beyond logic.A company which was commanding nearly 6000crs of market cap just a couple of months ago,is presently quoting at 162rs(1500crs)with more than 1cr shares awaiting to be sold at the least price.Its hard to fathom the reason of this meteoric fall which has dashed hope of thousands of gullible retail investors.Horror-stricken and panic -driven, they are now in a queue to dispose off,at whatever price is available.I would dismiss comments which blames RBI's intervention on the yellow metal.So what led to this fall?To me the one and only answer is "Greed".

On the words of the great Mahatma,“Earth provides enough to satisfy every man's needs, but not every man's greed".A reality check to the shareholding pattern vindicates the above quote.Mehul choksey-the main promoter of the company completely went nuts,his obsession towards making more and more wealth is largely responsible for the current massacre.This man devised a strategy of pledging shares as collateral in lieu to fund his creeping acquisition.As per the latest shareholding pattern,over 1cr 80 lakh shares are pledged(Macquarie Finance recently invoked the pledge shares and acquired 5.43% stake in Gitanjali Gems).With this pledged fund, he cunningly acquired over 1cr shares from the open market in the last three years.That resulted in Gitanjali's stock price rising from 120 odd in April 2010 to as high a figure of 638 bucks in April 2013.Mutual funds and FII's, assuming probably the company to be the next titan,bought heavily too.

I kinda have few questions for the MF as well as for the institutional investors who are having positions in the company.How in earth could you folks be an inferior to even a retail novice?If the story looked so rosy at 500 and 600,whats keeping you behind to go gung ho and acquire the shares which are lying so low?Or you are in no mood to believe the reported numbers,presuming them to be inflated?You would possibly argue now of why a company of its size which came with 258crs of PAT last fiscal, pays only a 40 lakh paltry tax stuff?You guys, the so called smart fund managers,some hailing from even Harvard,can really be so brittle,fragile and crack headed?Oh not to to forget the known paid puppets of the ritual idiot box programs.Where are you guys?The same question also awaits an answer from the man at helms-Mr Choksey.I have often seen you in many of the awards functions presenting prizes to the celebrities.Hell,not one or a couple,you kinda have as many as 5 brand ambassadors, promoting your company's brand.You are the guy who manages a company having sales worth 10,000crs.Cant you organize the 'mere in comparison' required funds for acquiring the shares?

Triggering of margin calls and pledged shares added up with some HNI's stop losses has murdered the company.Diplomatic management comments and unfavorable business environment has further bolstered more woes.So at what price the stock will settle down?I am really scared to even hazard any guesses.Quintessence is kinda what should I call it?.Vandalism or scandalism?Mr Choksey truly has made sure that all its investors gets strangled hold and choke incessantly.Probably with "the many corporate world ways", he would end up making up for whatever he looses in the present period."Ram Ram japna,paraya mal apna" as often being the case.But what about the retail investors?Who would pay for the losses and their miseries?No one is the answer which leaves the inevitable aspect of loosing another nomenclature of investors who would probably never come back again to the stock markets.Disclosure:I have no positions or vested interest in the company.As a matter of fact the only company, I own or have recommended recently remains,"Thangamayil jewellery".


vik.karma said...

What abt concurrent technologies. You were brittle,fragile and crack headed at that time? or was it ur "Ram Ram japna,paraya mal apna" phase ?

Anonymous said...

Gitanjali gems?? seriously??? that stock has fallen 70% in 3 weeks...Do you still recommend that stock?

arun said...


Comparing a usdbn company with a penny one hardly makes sense.In the penny stock fraternity often stuff like that would happen.And maybe that hasnt reap success but it doesn't mean others wont right?

arun said...


Whos recommending?Read the whole note and you would understand the penned stuff..

Kaushal said...

i messed up big time on this. :( my lost profits dont scare me off the markets though. just makes me want to resolve to not pay heed to the noise and avoid these traps. and makes the man in the mirror look totally stupid. who's choksey? it's me that i'm disappointed with. the risk in equity investing is not with the markets or the share or anything - its always the investor (his behaviour) that's risk inducing

Equity wealth said...

ya u messed up bigtime mate.But all part of stock markets.Atleast you dont fall in the heed of ones who clamours only about sebi and analysts of the world for their losses.

abhishek golatkar said...

He arun,,,
after a long time post from me...but just a bit confused that how the promoter will gain from butchering his own stock prices....??

Rbi's curb on importing gold on consinement basis surely played a bit part in a stock fall....but the still not clear abt the reason for 3 days 20% lower cercuits...

arun said...

How promoter would gain?Where I have penned that?I have just penned whatever is going on.Its good find you back re.

Harshil Budhbhatti said...

What about telecom sector......?
100% fdi approval..???
Shell I go for long..?

arun said...


Telecom is kinda saturated.Go for sectors which are beaten down heavily.Go for metals,infra where you have hardly anything to loose.

Anonymous said...

Hey Arun..........wat abt BHAGWATI BANQUET.....U recommended the very below form your recommendation of Rs 78.......May be promoters offloaded their holding via you..............Small Gullible indain investors.................

arun said...

Bhagwati banquets the next big thing to watch out for.It just feel from 78 to 50?Guess its nothing when we compare the other beaten down stocks.Forget selling the promoters are busy buying in lots.Check the shareholding pattern to confirm the same

Anonymous said...

Bhagwati Banquets promoters holding down from 45% to 38%. Promoters buying in big lots? hahaha.

Equity wealth said...

Whats there to laugh?Check the disclosures.Promoters didnt sell anything its just the pledged shares may have got liquidated.In any case the stock has moved up from 37 to above 60 in the same quarter.

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