Up 11% at 166 now
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Now at 174. This is damn quick
Jab bhav uppar jata ha mera mann lalchata ha 
Excellent call, Excel. Thanks, made some money
Glad that you made money. Whatâs your take from here is this is just a short term bet or this could be a lambi race ka ghoda?
i think the government is planning to increase the import duty on gold to curtail the deficit which may be dampener in the days to come.
True RBI published a paper today on how to curb the demand of gold to reduce the current account deficit
Motilal initiates on TBZ with a target of 330
http://www.equitybulls.com/admin/news2006/news_det.asp?id=114154
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Buy Tribhovandas Bhimji Zaveri Limited - Initiating Coverage - Motilal Oswal |
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| We recommend to BUY Tribhovandas Bhimji Zaveri Limited (TBZ) with a price target of `330. INVESTMENT ARGUMENTS: India - the largest jewellery market, highly unorganized, huge potential to organize: India is the largest consumer of gold in the world. According to a CARE Report, the Indian domestic gems and jewellery industry has the potential to grow from an ~ `2,20,000Cr (Gold Jewellery share ~80%) in FY12 to ~`3,00,000 Cr by FY14,which implies a CAGR of 14% with the organized sector expected to grow by ~30% during the same period. Currently market is fragmented across the value chain. There are ~ 450,000 unorganised players across the gems and jewellery sector. The Organized National Jewellers and Large Regional Jewellers account for ~ 6% and ~10% of this market respectively. Changing demographics, fast urbanization, more women in work force and reliable quality of gold will lead to sustained increase in the share of organized market. We believe, companies such as TBZ will be a natural beneficiary of this change. (Data Source: CRISIL and CARE) Strong brand, huge expansion to drive profit growth: TBZ is a 148 year old brand in premium and wedding jewellery. Promoters are in the business of jewellery for the last 4 generations. Jewellery is a business of customer's trust and therefore vintage with a credible track record gives jewellers immense competitive edge and moat. The company makes money primarily by making charges and mark up it levies on the gold and diamond. TBZ raised `200 crore from the IPO in year 2012 and plans to use funds for expanding its retail presence to 57 stores spread across 43 cities by FY2015 from 19 stores currently. High brand recall for wedding and fashion jewellery along with aggressive expansion will drive net profit growth during the years to come. Valuations & View: TBZ has delivered 65% CAGR in net profit during FY08-FY12. We expect profit CAGR of 40-45% over FY12-FY16E on the back of huge expansion in retail presence. Stock currently trades at PE and EV/EBIDTA of 13.5x and 9x FY14E, which looks reasonable considering the growth potential. Listed peer like Titan trades at ~27xFY14E. We believe, high double digit growth, high RoE(25%+) and good and visible brand will lead to rerating of the stock valuation over time. Recommend BUY with a target of `330 (19xFY14E EPS and 12xFY14E EV/EBIDTA) |
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| Source:Equity Bulls |
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Company seems to have posted decent set of results though YOY comparisons are not available. 9m-FY13 sales at 2874 cr is already 95% of FY12 sales of 3042 cr. EBIDTA margin has been maintained at 10% levels for 9m as well as for the 3Q. PAT margins are around 7.5%, again consistent. Some good breakup is provided by management at this link - http://www.moneycontrol.com/livefeed_pdf/Feb2013/PC_Jeweller_Ltd1_070213_Rst.pdf results link - http://www.moneycontrol.com/livefeed_pdf/Feb2013/PC_Jeweller_Ltd_070213_Rst.pdf seems focus continues on reducing exports and increasing diamond sales proportion as per management confirmation in the attachment. Cash from IPO has still not been used. stock at 140 has come back to near ipo level (issued at 135, listed at 138 and closed above 150 if i remember correctly). moved upto 180 levels. the extent of the fall back to 140 is little surprising (titan hasnt fallen by much) in light of all seeming macro negatives surroinding the sector - reduction of lease period, increase in duty etc. TBZ has fallen by much more. but it is possible because it still derives some income from gold inventory, and is not entirely onto lease model yet. havent looked at their results though. Excel - any views on PCJ for fresh investment?
Hi Vinay,
The numbers look fine slightly below what I was expecting. Also they havenât talked about any new store openings in earnings release.
The recent fall in small jewellery companies can be attributed to the general weakness in the mid caps since last few days and govt postering against gold imports in general. Somewhere I think market was expecting a miracle this quarter from jewellers which did not happen.
I am attending PCâs earnings call today and would keep you updated.
Regards,
Link: http://www.moneycontrol.com/livefeed_pdf/Feb2013/PC_Jeweller_Ltd1_070213_Rst.pdf http://www.moneycontrol.com/livefeed_pdf/Feb2013/PC_Jeweller_Ltd_070213_Rst.pdf
hi - thanks. will await your feedback. as per page 33 and 34 of DRHP, they were to open 13 stores in FY13 and according to this link âthe company opened six stores during the current fiscalâ. http://www.thehindubusinessline.com/industry-and-economy/marketing/pc-jeweller-q3-net-at-rs-67-cr/article4389547.ece also if you could enquire (if given a chance) of the status of their dues from their international related parties (hongkong and singapore i think), which formed more than 90% of their total receivables (FY11 data) and which extended for more than 200 days of their export sales. does anyone have their FY12 annual report?
As per concall, company to open 6-7 more stores within next 2 months.
Expect share of diamond jewelry to improve to 35% in 4Q2012.
Summary of the conf call:
the management described the results in plain terms you may access the same on stock exchangeâs website
Q&A
Q: why the margins are so high in the export business?
A: We do only high value products.
Q: on Tax rate
A: should remain around 20% for next two years. could rise to 30% by the end of 5 years.
Q: on Diamond sales:
A: Diamond sales are higher in the 4th quarter in 3rd quarter 27% of sales were from Diamond in 4Q we expect the contribution of diamond to rise to 35% and we see a 32% contribution from diamonds for the year
Q:What part of your sales comes from NCR
A: 53% of the sales as we have 40% of our stores in NCR. Volume wise we have seen a 10% growth in sales and the growth has been 20% in value terms.
Q: New store openings
A: we havenât opened any new store since IPO but we plan to add 6-7 stores in next 2-3 months. Currently we have 1.65 lac sq feet of space which we plan to increase by 30,000 sq feet in next few months. New store typically break even in 3-6 months.our capex is around Rs 4,500 per sq feet a typical store is of 5000 sq feet. we plan to spend 50-60 crore in a year or so on 20 stores.
Q: Margin breakup
A: Exports gold = 12%.
exports diamond = 18.
domestic gold = 9%
domestic Diamond = 30%
Gold diamond revenue mix is almost 65:35 for both domestic and exports
Q: why your employee cost and advertising lower as compared to other players?
A: because we also have presence in tier 3 towns where the employee costs are lower (not very convincing answer) and our adv and marketing exp is 1% of sales and as the sales grows our adv grows.
gold leasing cost: at 3 to 3.5% per annum. we have also applied for an import licence to import directly.
Gold harvest scheme: a total of 90 crore lying under the scheme. customers generally buy more than the ending value of the scheme. we have taken a provision of 4 crore for future under the scheme.
refused to answer balance sheet related issue
there comparative numbers for last year were not available as the company was not listed that time
All in all I was not impressed with the call.
I think it would take a bit more of delivery before market starts trusting them
Am attaching links to a comparison done on a website (available freely and not restricted to subscribers) which gives a very good overview of the new jewellery players. http://www.equitymaster.com/detail.asp?date=03/20/2013&story=1&title=Should-you-invest-in-this-newly-listed-jeweller http://www.equitymaster.com/detail.asp?date=04/09/2013&story=1&title=Should-you-invest-in-this-newly-listed-jeweller--II PCJ is quoting at around 100 Rs. at a PE of 6-7 times which is attractive considering its growth (past and future), margins (comparable to Titan), return ratios (also quite high). Debt equity is higher than Titan, but lower than others and seems reasonable at 1.25. Only negatives from financials to me are fluctuating cashflows and overseas receivables. The stock crashed to IPO levels (130 odd) in view of the industry specific negatives documented in the earlier posts. The recent fall in gold price seems to have further brought the price down. PCJ does not hold inventory and hence the gold cost for it would largely be a pass through, like Titan and unlike TBZ. Jewellery sales are likely to pick up with the price being low and with auspicious dates coming up. Low prices would keep âinvestorsâ away but would attract âconsumersâ. Brand is well known. The products seem to be positioned in between Tanishq (largely for the working woman) and TBZ (largely heavy wedding wear). In my opinion the price seems to capture the current negatives and looks to be a good buy. Views invited.
Previously vinay ambekar wrote
All points you made are valid two things one need to keep in mind
Q3 numbers were not great and Q4 could also surprise negatively
I think it would be hard to achieve guidance of 300 crores for FY13
I have reduced my position in the name considerably but still hold a small quantity
True that Q3 was not on par as indicated by figures below. NP of 300 cr would certainly be a stretch. FY12 H2 FY13 9m FY13 Q3 FY13 Sales 3042 1855 2874 1018 EBIDTA 332 236 350 113 EBIDTA % 10.91% 12.72% 12.18% 11.10% PBT 265 177 261 84 PBT % 8.71% 9.54% 9.08% 8.25% PAT 231 141 208 67 PAT % 7.59% 7.60% 7.24% 6.58% If they perform equal to Q3 in Q4, then sales will be about 3900 cr and PAT of 275 cr ie margin of 7%. With 18 cr shares, eps is 15 and at 100 Rs , PE is 7. I found their corporate presentation quite informative providing interesting details of store level operations and finances. They target 60% ROE for each store which is achieved as the operations of the store stabilizes. They manage to earn ROE of 40% at the start, which is extremely good.
Vinay
The issue is more of trust. It takes time for market to trust a new company. What is not helping building this trust is their export business which is working capital intensive and their cost structure which market think is too low to be true.
This trust will come with delivery and transparency
this will take time at least a few more quarters of delivery and interaction.
Regards,
I just had an interaction with a friend of mine. Interesting snippet of information.
He had been to around 3 big shops in Ahmedabad â tbz, kalyan and some other jeweller
With the fall in gold prices there seems to be a virtual stampede to buy gold jewellery and there was a line to buy gold jewellery at all three shops. The salesmen were stretched to attend to customers.
looks like june qtr can be a bumper quarter for these jewellery companies.
What we need to do is to seperate the companies which will be affected by inventory loss and avoid them.
Best choice appears to be titan.
hitesh.
Can someone pleaseexplain this to meâŚ
A jeweller will have gold in its showroom to attract customers. Whose gold is it?
Isnât inventory risk born by the jeweller in this case?
How are Titan & PCJ different from this model?
I know Titan has a scheme by which you pay EMI for 11 months & then Titan pays for the 12th month & then you get the jewellery after 12 months. Does this scheme passes on inventory risk to customers? If yes, Kindly explain howâŚ
If no, how these comps Titan, PCJ pass on inventory risk to customers?
it may be just that people have advanced their buy decision from summer marriage season.