Rajesh Exports – II

I valued Rajesh Exports in April and found it to be undervalued at a trading price of ₹521.50. I bought the stock at that price and since then the stock grew at near the index’s rate of return. They released their Q4 results this past week and I took another look at their valuation with the new numbers while sticking to my original story.

Numbers and Narratives

Rajesh Exports is the world’s largest gold company with end-to-end prescense in the value chain of gold. They had a topsy turvey revenues growth over the last 5 years, even though the compounded growth is 31%, that value masks the drop in revenues after a steller year in FY16. I expect the company to revert to below average growth rate owing to the size of the company. I expect it to continue its miniscule margins owing to the nature of the business.

The core numbers that I arrive at based on the story are

  • Compounded revenue growth for next 5 years = 20% (31% historical)
  • EBIT margin in year 2 = 0.75% (~0.8% historical)
  • Initial cost of capital = 8.00%


I’ve used the above numbers along with the financial information to compute my DCF valuation for Rajesh Exports as seen below.

As you can see, the valuation price came out to ₹557.48, very close the current trading price of ₹564.90. The stock has overshot its intrinsic value so, I exited this holding today.



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