Tribhovandas Bhimji Zaveri Ltd -- TBZ

Not just that hibhai, what is also interesting is more and more woman are getting employed(rather being housewife) and hence have direct income(unlike past here they have to ask for money from husband) … so woman spending on personal items can grow very fast(be it jwellery, beauty products or branded woman accessories)

Not just that hitbhai, mgmt is planning to move to complete Gold on Lease model in two years which will lead to less risk and PE appreciation … only we should pray that gold should not crash before TBZ moves completely to Gold on Lease … Moreover many global Gurus like Jim rogers, Marc Faber predicting QE3, QE4,… so Gold unlikely to fall although we have to take intoconsiderationrisk of falling gold prices while deciding % of TBZ in portfolio

thanks rohit for the views although i cant make much out of it. It seems to have a mahesh-ish touch about it.

With all the analogies of train and roses and what not, What I could gather is the fact that you dont consider TBZ a brand and a stock worthy of investment. (by the way It could have been written in plain simple english that TBZ as a brand does not stand anywhere near titan)

We all know different opinions make a market so thanks for the updates on management family feuds and all other things.

What is brand??

Ask people in south India about Thangmayil … I am sure many won’t be knowing about it

Ask people in western India about TBZ … I am sure many consider that as name for Quality and Trust

Biggest risk while buying GOLD is Gold seller can cheat u and hence branded nameTanishq, Thangamayil, TBZ or our jweller Pednekar(www.pednekarjewellers.com) play important role while buying even if buyer is poor

.

Informative thread indeed. this one really looking interesting.

Rohit, [completely my personal view]its not bad if new business trying to copy the leaders. infact it wonât be easy if one ignore the leaders completely. If we see, even Wal-Mart had followed the retail basics from some other business which was running successfully at that time. Even today’s most popular office products Excel/word took the basics oftools which were popular at that time [new innovative features were added subsequently]. But still they are highly successful. So it shouldnât be a worry. Important thing which promoters will have to show is how well they do it.

As samir has highlighted, they are already working to move from gold on lease, that will definitely minimize their risk and would add up more on earnings.

If I am not wrong, they are hiring professionals for some positions in Kolkata[http://www.spanjobs.com/india/jobs/retail-merchandising-jobs/kolkata-jobs/showroom-manager-for-jewellery-retail-store-at-tribhovandas-bhimji-zaveri-ltd/3946366] so may come up with new store in Kolkata [ not sure though], and they recently opened branch in Baroda too [as per Hitesh Info ]as well so seems quiet aggressive too. Should wait and watch how well they are doing their job along the time. Their game have just started so should have plenty of occasion to enter if it turns up to be investment worthyâno hurry !!

As whole world try to follow Munger/Buffett for me … for me [being a novice] Valuepickr experts pick is enough at the moment :wink:

Thanks

Hitesh Bhai

Eagerly waiting for your review on TBZs baroda store

Does someone see’s a red flag here ?

For the year 2012 (as par annual report )

Net Profit: 571,930,158
Salary of MD+ 2 Daughters : 132,300,000 (94,500,000 + 18,900,000 + 18,900,000)

gawdeji

this salary certainly seems on the higher side for a company of the size of tbz.

Probably this is one of the reasons for low dividend. Promoters are paying themselves through salary rather than dividend.

Just to put things in perspective here is the comparisoon of the other two companies I track

Titan Industries
Net Profit: 5,980,000,000
Salay of MD: 31,618,190

Page Industries
Net Profit: 899,850,000
Salary of MD: 11,941,200

**TBZ **
Net Profit: 571,930,158
Salary of MD+ 2 Daughters : 132,300,000 (94,500,000 + 18,900,000 + 18,900,000)

Profits of TBZ (2012)
0.1x of Titan
0.6x of Page

Salary of TBZ MD:
8x Page MD
3x Titan MD

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Thanks Gawde ji for bringing this to group’s notice. It was one of the main reasons that put me off (and others I know) from TBZ.

Other points, which might appear to be minute but unpleasant nevertheless :

)- Planned shift of corporate office at Nariman Point, which would drain 25cr. Also, if I am not wrong, the store (~ 1400 sq ft) at Churchgate is draining atleast 1cr p.a. just on rent

)- They seem to have bought two BMWs (for the daughters?).That’s another 75lacs down the drain.

)- Not really sure what exactly is a part of the other income that brought in 5cr. for the company. (check page 73; revenue from operations)

)- Sale of products (finished goods) remained flat for FY12 vs. FY11; as such, the uptick in FY12 seems to have come from traded goods. However, purchase of traded goods also came down In FY12 and there is no mention of sales from traded goods in FY11. Wonder why/how it has been considered in FY12 (refer notes 21 and 24 in AR12)

Regards,

Rohit

Titan Industries

Page Industries

**TBZ **

Debatable; I hope your views are not influenced from availability/selection bias (55% of their sales are from Mumbai; so, you’re very likely to hear, “yes, i know tbz” from a mumbaikar/amdavadi than maybe someone from a nashik, nagpur, etc. Further, the competition is high in such places from the likes of Tanishq, Tara, etc.) Also, I never said Thangamayil is a brand that is recognized all over India/more than one state. I am okay if that’s the case even for the next 5 years. Isn’t it better to be with a big fish that becomes bigger in a small, growing pond than to be with a small fish in a large pond?

Nevertheless, the point is about paying 4x P/E vs. 12x P/E for businesses that might appear to be similar, but differ significantly given Thangamayil seems to have leaner costs (rent, salaries, advertising, etc.), higher dividend payout (while maintaining a higher RoE and potentially higher sales/PAT growth in the future) and what seem to be god fearing, down to earth and shareholder friendly management.

This detail on salary structure is indeed very interesting and important.

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Hi,

Please be careful here, the story looks good, but numbers are not exactly sane. During IPO group had done lots of “stuff” to ensure that IPO sailed through.

regards,

CS

This company has a business history going long back, probably back then, even the BOMBAY STOCK EXCHANGE was not in existence. The concern about high salary is valid, but i will consider it as availability bias, What we should be looking at is the underlying business fundamentals, They have been there since last 100+ years and probably will be there for the next 100. A well known established brand trading at around 700 Crs MCAP, While the sector leader trading at around 20000 Crs Mcap. Well i think this has a long way to go.

Disc. Have no positions, But waiting for a right day.

Not much activity on this thread while the price is moving higher n higher as predicted by champ Hitesh Bhai.

EPS expected to be 13 n 20 in march 13 n 14 ,market cap still reasonable at 800 to 900 crores. pC jewellers, Tara jewels IPO expected shortly can this scrip still move forward?

Views invited

vivek,

Agreed that TBZ is a retail story unfolding. But since the run up from around 90-95 levels when we discussed the run up in the stock to current levels of around 140 has been very sharp, I think we need allow the stock to settle down in a range before taking a call.

Don’t want to sound like a party pooper on the TBZ story, but I am a bit perplexed at the lack of questioning and just looking at the positive side of the coin. They plan to spend 1200 crores for 43 stores, and though this sounds amazing, show me the color of the funds they plan to use. Their IPO just raised 200 crores, that is not going to cover it. Further equity dilution? Or are they going to raise humongous debt? And considering how over ambitious companies capulated in the past few years being too ambitious, and getting killed by debt. TBZ needs a lot to clarify. In relation Titan has grown much more carefully. TBZ to me seems to be wanting to chew more than they can swallow. I hope they reach their targets, but to me it looks extremely risky.

Also why does TBZ need nearly 30 crores to open one store? It seems a bit far fetched, are they making buildings?!

Why I bought into Hitesh’s idea?

It is 140 year old brand

A successful model which they just have to replicate in other geographies

Just look at the response they got when they opened their baroda store

They have a desirable product - that’s the punch line for a successful consumer product and that is very much in place

On negative side one doesn’t know if the promoters would act prudent with expansion or be aggressive and kill the efficiency ratios for long time to come

Or if they would share the upside with shareholders - abnoxiously high salaries of the CEO are negative indicator

There are a few of the factors to be considered for TBZ

1). Huge size of opportunity .Indias standard goldsmith typically apne baap ko Bhi nahin chodta. as such for a trusted brand if he stick to ethics n lates design n trends the opportunity is huge.

2). Working women are increasing by leaps n bound all over India and they constitute a large chunk of target market.

3 Superb brand which is a huge moat.several of my Mumbaikar cousin swear by it and don’t go anywhere else.

4). Reasonable valuation which can still increase greatly if the management wals the talk and shares profit with investors through dividend instead of salaries which I believe is already on the way.

5). Step by step opening of stores strategy being followed and initial response has been great to say the least in recent openings.

6). Gold lease plan would increase margin,reduce risk, increase ROCE which is already at a decent 40 plus %.

7). QE 3 has ensured that gold prices remain strong for next 2 to 3 years nd as such future remains bright for TBZ and other players.

8, the company is one of the oldest in it’s field and the promoter shud be smart enough to walk the talk n catch the opportunity when the circumstances is so favourable.

9). Gold as an asset class has been since Inca civilisation and would remain so for next hundreds of years thanks to its liquidity and constant appreciation.let these invest,eats act as a proxy of gold investment for several investors like me