Gitanjali vs. Tiffany & Co. (USA)

Tiffany & Co. (USA) is one of the biggest players in diamond Jewelry worldwide.  Its jewelry products include fine and solitaire jewelry; diamond engagement rings and wedding bands for brides and grooms; and non-gemstone, sterling silver, gold, and platinum jewelry. The stock rose around 50 times (from 1.6 dollar to 80 dollars) in the period from 1987 to 2011. Presently, it is quoting around 61 USD and has market capitalization of 7.7 Billion dollars (Rs. 38500 crores) on sales of 3.6 Billion USD (Rs. 18000 crores). Thus, Enterprise Value/Revenue or market capitalization vs. sales (say MC/S) ratio for Tiffany & Co. (USA) is around 2.1. Whereas, that of Gitanjali is 0.52 (Based on (i) market price of around 446 as on 21.11.12; (ii) 2011-12 Standalone sales - 7745 cr and (iii) MC - 4072 cr). In my view, Gitanjali’s MC/S should also approach 2.1 (that of Tiffany & Co.). Whenever this happens, on present standalone sales of March 2012, Gitanjali should reach around Rs. 1800 and may be much more based on projected 2013 and 2014 sales (Sales growing at around 30 % for the last 2 years).