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Rajesh Exports posts brokerage reports on stock exchange sites

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Evaluate and FirstCall are the only two brokerages that track this company.

It is unusual for companies to post brokerage recommendation reports on stock exchange websites. Rajesh Exports NSE 1.65 % , the country’s largest listed bullion company by turnover, has put up a research report by a lesser known brokerage ‘Evaluate’. This is amid the cloud of suspicion surrounding the jewellery business in the aftermath of the recent PNB NSE -1.79 % fraud involving prominent jewellers.

In the recent past, only two other companies have shared their brokerage reports on stock exchange websites —Shilpa Shetty Kundra promoted Viaan Industries, which has interests across nutrition, gaming and mobile retailing, and Mumbai-based plastics products maker, Fiberweb (India).

“We want to improve the transparency of our company,” said Rajesh Mehta, chairman of Rajesh Exports. “All the problems that have happened are with the diamond side of the business and has nothing to do with us. We are in a different business altogether and completely debt free,” he added while referring to the recent scams.

Listing Obligation and Disclosure Regulation (LODR) has been silent on the posting of brokerage reports by these companies. The regulation mandates to le information on analyst meetings and presentations shared with them.

“Under Sebi Listing Regulations, it is not that each and every broking or analyst reports is to be disclosed on the stock exchange by listed companies, else there will be flooding of disclosures without serving any purpose. Selective disclosures of positive or negative recommendations, without applying guidelines of materiality would only be a convenient interpretation of the law,” said Sumit Agrawal, ex-Sebi official & a regulatory lawyer.

KRCV Seshachalam, partner at Visesha Law Services, said, “If a company posts a brokerage report, it should make adequate disclosures on the purpose of sharing and whether any compensation is paid for the report.”

The Bengaluru-based jeweller reported sales of 2.4 lakh crore in FY17, almost 20 times that of Titan. Its revenue shot up after it acquired Valcambi, the world’s largest gold refining company in 2014-15. It made a net profit of Rs 1,250 crore in FY17. The company which is into re ning and wholesaling of gold in India and overseas and also into jewellery retailing, claims that it is the lowest cost gold products producer in the world.

Rajesh Exports has a market capitalisation of Rs 24,000 crore. At a time when several big names in the industry are defaulting on debt payments or are debt burdened, Rajesh Exports has a cash of Rs 15,000 crore on its balance sheet against a debt of Rs 5,500 crore. Usually companies take debt despite having cash when the interest rate received on cash is higher than the interest rate on the borrowed money or when the company hunts for an acquisition.

It is surprising that despite impressive financials and the large size of the company, none of the large brokerage houses track its stock. Evaluate and First Call are the only two brokerages that track this company, according to Bloomberg data.