Tbz Gave 25% discount on makingcharges for its share holders through DISCOUNTcoupons.
242 now))
276 now.
But I am confused if this is fundamental buying or some sought of operator activity
I think its in a bubble territory. So are a lot of jewellery stocks which have joined the bandwagon.
**
Agreed.
The only concern here is this one could rise again after correction as there are fundamentals backing this name compared to other diamond companies which have also risen in tandem.
The rally started after affirmation of their model in other regions like Kolkata indicating that they would be able to successfully scale up their operations.
Now the question is should one book short term profit and buy again after correction (levels are very hard to predict) or just stay put in it as fundamental story and act only is there is any deterioration in the business or operations
276 now.
But I am confused if this is fundamental buying or some sought of operator activity
I bandwagon.
**
For those following the glitter of gold here is some more information.
INDIAN JEWELLERY INDUSTRY
Size: Rs.1.30 lakh crores. Of which Diamond Jewellery Rs. 70,000 crores. No. of Jewellers 3 Lakh, No. of Brands 15-20, Brand Market size: 12-15%, Growth Rate for Branded Jewellery 30%, Online Jewellery Market 200-250 crores. Bridal Jewellery accounts for 60% of the market down from 80% a decade ago. Market for affordable jewellery growing at 30% from under 5% approximately 8-10 years ago. Indian Jewellery market growth rate is 15-20% per annum.
Here is an article for those interested in details in Outlook Business
Hitesh Bhai as someone pointed out earlier is not Gitanjali a good bet even now. I went through the outlook article given aboveā¦it is the second largest player next only to Titan and has huge expansion plansā¦It is trading at less than 10 P/E as per screener.in
Would like to get your view on thisā¦request you to share the same with us
I also found Talwalkars to be a good scalable and profitable business. Link for the research which put this idea into my head is as below:
Please do let me know your respected views on the above
Motilal initiates on TBZ with a target of 330
|
Buy Tribhovandas Bhimji Zaveri Limited - Initiating Coverage - Motilal Oswal | |
| 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) | |
| Source:Equity Bulls |
Hitesh bhai
TBZ has opened three new stores in last 4-6 weeks
Execution going on well. Donāt know what kind of response they are getting for new stores.
Is TBZs chart displaying a major flag pattern?
Thanks in advance
Hi excel,
at this moment which is a better bet,pc jeweleers or tbz in terms of valuation,just have a feeling that tbz has a better brand recall than PC.What do you think would be the right price to get into tbz.I think the increase in import duty is a certainity and maybe we will get lower price points to enter.
Hi biju,
Both look interesting to me. TBZs advantage is that it is a 100% retail play where as PC has better margins and a larger company. I think for TBZ a major part of PE rerating has already happened from now on market is more focused on their execution. I am impressed with TBZs execution, they have opened something like 8 stores since they listed. Now how soon the stores would become profitable is the key monitorable. If the numbers suggest they they are breaking even as planned you could see further rerating from here.
With regards to PC I think market is keenly watching the conduct of the management along with the delivery. I would guess that they are going to keep the momentum in the earnings and are going to deliver a good quarter and would be a good trade with 1-2 months perspective.
Regards,
Also Biju 2-3% hike in import duty would not dent the demand. As the gold price fluctuate 2-3% on daily basis and that has no effect on demand. This raise in import duty would just lead to more gold smuggling.
excel,
how does this hike in import duty affect gold prices in indian currency?
or is there going to be no effect?
hitesh.
Hi Hitesh bhai, the increase in duty would certainly lead to increase in gold prices in rupees. What I am saying is this 2% increase is not enough to lower the demand. As we see gold goes up and down by 2-3% on daily basis and this does not effect the demand of tue gold. Regards,
Just one point - I had invested some amount in a Gold ETF long time back and was looking to exit it in FY11. I generally put limit orders at the beginning of the day since the rest of the day I cannot access trading from office. My observation is that gold prices rarely fluctuate 2-3% on a daily basis (my limit orders of 2-3% up rarely got executed!). Not sure why, but like Rupee (where 1% move is also considered very high), gold also does not move by as much in normal times. Just my observation. But tend to agree that while initially there will be reaction to the duty hike- ie price increase, it will be kept in check by drying up of demand since most of the festival season is almost over. Eventually when we get used to the high price (new normal) demand may return. Same issue was faced recently too when there was a hike, but that did not see a big drop in demand in Q3. Also jewellers tend to compensate by lowering their making charges so that total cost to buyers does not become very high. Another thought is that, if with all the slew of moves done by the government, if indeed they are able to bring down the actual current account deficit number, next year they may very well reverse the duty hike too. But this is speculative terriroty. I also heard that there was parallely some news about gold deposits, which is expected to benefit jewellers. Still trying to understand. Anyone with views?
there was a gold deposit scheme already however the tenure for the scheme has been reduced/minimum quantity has reduced making it attractive for people to deposit the idle gold,this gold would be avaailable to jewellers.The gold etfs can also park their gold with banks which would be available to jewellers.In short the whole idea is to increase/promote the availablity of domestic gold .
I am not sure how this will work. Most of the gold holdings in India are in form of jewellery.why would one like to melt the jewellery for 5% return when themaking charges are something like 5 to 15%. Also there are emotive issues to let your jewellery go in one form to be returned in another form.
I would say put a female hat and think would your wife, sis, mother or GF would be ready to lend their jewellery.
Anyway this gold lending has a kind of neutral affect on the jewellery shares.
Net up 30% though margins are down significantly.
Good traction in new stores
Might improve margins as stores mature
Hi, I wanted to restart the discussion on TBZ in case any members have been tracking it as well.
It appears TBZ has hit a growth wall in recent times, with slowing SSG, 30% decline in revenue/sqft, rising debt (1.2x) and slow store expansions. Also managementās obnoxiously high salaries and the extremely high inventory days (200+) are still hard to ignore.
However they have recently started down the franchise route with their first franchise opened in Nov15 and 2 more agreements entered into recently. Target is to add 33k sqft via franchise over the next 3 years vs their 98k current retail space. Would an asset light model, where inventory gets funded by franchise help restart growth? Also gold on lease has been increasing as a proportion of biz and this should reduce funding cost (5.5% vs 10% for bank debt) and gold price volatility.
The current price of Rs 56 when compared to peak eps of 13 in FY13 translates to a 4.5x. Price/sales is 0.2x. Note that YTD EPS is negative, FY15 EPS was ~4. I wonder if the stock has hit a bottom? Still cautious about adding this stock but evaluating investing <5% of portfolio in it.
Do share your views in case Iām missing the reason why the thread went silent over 3 years back! 
Looks like All Organized Jewellery retailer are going to post good result