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"SUBSCRIBE" to Tribhovandas Bhimji Zaveri Ltd. IPO - Ajcon Global
Posted On : 2012-04-23 10:56:57( TIMEZONE : IST )
Tribhovandas Bhimji Zaveri (TBZ). is a well-known and trusted jewellery retailer in India with 14 showrooms in 10 cities across five states, which have a total carpet area of approximately 48,818 sq. ft. The company is engaged in retailing of gold jewellery, diamond-studded jewellery, platinum and jadau jewellery. The design and manufacture of its products is done either in-house or by third parties. All of its showrooms, trade under the name of "Tribhovandas Bhimji Zaveri". Its flagship showroom in Zaveri Bazar, Mumbai was established in 1864. Since 2001, it has opened several showrooms, including opening seven showrooms between August 2007 and October 2008. The company is planning to add 43 new showrooms under the Tribhovandas Bhimji Zaveri brand in the next three years, which is around three times of its current size.
TBZ has global presence too. It offers jewellery from various parts of the world such as Italy, Turkey and Thailand. In Fiscal 2011, TBZ's revenue from operations stood at Rs. 11,939.3 mn on a consolidated basis, of which 72.51% was from the sale of gold jewellery, 22.08% was from the sale of diamond - studded jewellery and 5.41% was from the sale of other products.
At the upper band of the issue price, TBZ is valued at 13x - 9MFY12 Annualized EPS/share of Rs. 10.06/- at upper end of the price band. With due consideration to factors like a) existence into business of gold since 1864, well recognized and established brand, b) expertise in the business of jewellery retailing, c) good demand for gold jewellery in India despite a significant rise in gold prices by 28% in 2011 on yoy basis, d) diamond jewellery business forming a part of revenue business which would lead to improved margins, we believe the stock is priced reasonable.
However, concerns like possible decline in gold prices, higher working capital requirement, and significant competition from unorganized and organized players may affect the performance of the company. We recommend investors to "SUBSCRIBE" the issue for listing gains as it is a proxy for India's consumer story.
