Shares of Indian gold jewellery houses take a hit at bourses

MUMBAI (Scrap Monster) : The Indian gold jewellery houses have taken a hit by the recently announced central bank gold import norms. The shares have slumped immensely, erasing crores of investor wealth in a matter of just few days.

The Reserve Bank of India on June 4^th had announced that gold imports would be allowed only on 100% cash margin. The jewellery houses that used to get 90 to 180 days credit were then forced to make upfront payments for their gold purchases. This has obviously affected their net cash flows and has necessitated a careful shift in the entire business model.

The shares of Titan Industries tumbled 13.76 % in today’s trade. The stock has plunged nearly 30% since the RBI’s policy announcement on June 4^th. The market capitalization of the company has eroded significantly. Analysts forecast the company’s net profit to fall by at least 13-14%. The shares of the company saw heavy selling, dragging it to 52-week lows.

The shares of Gitanjali Gems and TBZ- the other prominent jewellery makers also saw deep cuts, plunging by nearly 11% and 19% respectively in the last nine trading sessions. TBZ plummeted 10.73% today alone.

Though the gold jewellery houses have not yet quantified the impact of the RBI policy on their business prospects, the stocks of the companies witnessed a furious blood bath at the bourses.