Gautam Gems Limited

Consumer Cyclical — Luxury Goods · BSE

₹3.08+₹0.04 (+1.32%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:51 pm

Understanding the Business

Company site ↗

The 60-second version of Gautam Gems Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Gautam Gems Limited engages in the manufacturing and trading of rough and polished diamonds in India. It also offers gold jewellery and lab grown diamonds. The company was incorporated in 2014 and is based in Surat, India.

IndustryLuxury Goods

SectorConsumer Cyclical

Employees13

Annual revenue₹80 Cr

How does it make money?

Turns over ₹80 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹2 left at the operating level before interest, tax and depreciation. Each of its 13 employees supports ₹6.13 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹6.13 Cr

Who are its competitors?

The closest listed comparisons in its industry are TITAN COMPANY LIMITED, TRENT LTD, AVENUE SUPERMARTS LIMITED, ASIAN PAINTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 2.3% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE25.9%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -13% while net margin moved +127% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-13%

Margin effect+127%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 1.3% is weak

Quality vs. Valuation

Company Quality

47/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

80/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

18.1x

3Y Median

56.0x

40 monthly readings · mean 53.9x · range 19.1x–113.3x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 68% below its 3y median of 56.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 74% below the peer median of 69.2x.

vs. its own history

Cheap

56.0x median over 40 months · -68%

vs. sector peers

Cheap

69.2x median of 4 peers · -74%

vs. generic bands

Fair

15x–35x

EV/EBITDA

13.3x

PEG

0.71

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 11% over 3 years.
Very low debt
Debt/Equity of 0.11x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Inventory building faster than salesFinancial
Inventory up 144% against revenue up -13% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹0 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 68% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 74% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 3.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 0%✓ 1.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
4ROCE stays above 8%✗ 2.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 4.6x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

6 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹14 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

18.1x

Fair

Fairly valued against the generic band

P/B Ratio

0.27x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.17

Profitable

Profitable on a per-share basis

ROE

1.3%

Weak

Weak capital efficiency

ROCE

2.3%

Weak

Low return on total capital employed

Debt/Equity

0.11x

Low

Conservative leverage

Revenue Growth (YoY)

24.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

50.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹0 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

0.7%

Weak

Thin margins leave little room for error

Net Margin

0.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

3.28

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.71

Defensive

Steadier than the market

52W Range Position

40%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

3.0 / 3.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

49.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹91 Cr	₹101 Cr	₹78 Cr	₹80 Cr	-4.5%
EBITDA	₹1 Cr	₹1 Cr	₹1 Cr	₹1 Cr	+15.0%
EBITDA Margin	1.1%	1.0%	1.1%	1.9%	—
PAT (Net Profit)	₹0 Cr	₹0 Cr	₹0 Cr	₹1 Cr	+25.6%
EPS	₹0.19	₹0.08	₹0.07	₹0.16	-5.6%
ROE	1.4%	0.7%	0.6%	1.3%	—
ROCE	3.3%	1.7%	1.5%	2.3%	—
Total Debt	₹6 Cr	₹4 Cr	₹6 Cr	₹6 Cr	-3.8%
Free Cash Flow	-₹9 Cr	-₹26 Cr	₹0 Cr	-₹0 Cr	—

🔴 Revenue has shrunk at 4.5% a year over 3 years.

🟢 EBITDA has grown at 15.0% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 1.9% over 3 years.

🟢 PAT (Net Profit) has grown at 25.6% a year over 3 years.

🔴 EPS has shrunk at 5.6% a year over 3 years.

🟡 ROE has held roughly flat at 1.3% over 3 years.

🟡 ROCE has held roughly flat at 2.3% over 3 years.

🟢 Total Debt has shrunk at 3.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹74 Cr

Total Liabilities

₹22 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹0 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

55.1%

Peer Comparison

Company	P/E	ROE
TITAN COMPANY LIMITED	68.5x	36.7%
TRENT LTD	87.2x	25.9%
AVENUE SUPERMARTS LIMITED	69.9x	12.7%
ASIAN PAINTS LIMITED	46.9x	22.3%

Recent News

6 general

Gautam Gems appoints Dishant Jagad as internal auditor for two years

scanx.trade, 05 Sept

Compare with

Equitymaster, 08 Oct

Top Gold Stocks to Invest in India in 2026

Samco, 11 Oct

Gautam Gems appoints Madhav Upadhyay as secretarial auditor for five years

scanx.trade, 02 Oct

Compare VINTRON INFORM with

Equitymaster, 10 Oct

Multibagger stock to enter into new business segments, scrip hits upper circuit

Livemint, 01 Jan

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingGrowth

WeakBusiness Quality · Profitability · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑