• Date: April 25, 2012
• Offering: IPO is of Price Range Rs 120 – 126, available from April 24 – 26
• Description: TBZ is a small cap sized domestic Gems and Jewellery firm with big growth plans
• Opinion: Strong Brand and fast expansion likely. Fairly priced. Invest.

TBZ – Description and Profile

• Tribhovandas Bhimji Zaveri Ltd (TBZ) is an established Mumbai based Jewellery retailer.
• Incorporated in 1949, TBZ has 14 showrooms in 10 cities, and 1,192 full-time employees. It’s a primarily domestic business. Only two of the showrooms are owned; the rest are leased.
• Jewellery Product lines include Gold Jewellery (72.5%), diamond studded (22%), Platinum and Jadau (5.5%). Manufacturing of Diamond studded Jewellery is at a 17k sq ft factory at Kandivili, Mumbai.
• Promoters are Shrikant Zaveri (2^nd gen. entrepreneur) and daughters Binaisha and Raashi Zaveri
• FY11 revenues were 1149 cr, PAT 404 cr, and recent Operating margins were 9.3%
• In five years, sales growth of gold jewellery is 8%  (CAGR) and diamond 38%
• Showroom area is of approx 48,818 sqft, indicating sales of Rs 2.35 L/sq ft per year. This compares favorably with Tanishq (1.67L) and Gold Plus (1.05L). These chains are of a different scale nationally, but this is till positive for TBZ.
• TBZ offers the Kalpavruksha Plan, a retail Installment based purchase plan. This helps ease the payment pressures for large buys.

Personal Notes: A visit to a TBZ is a treat by itself. The ambience is plush, the salespersons are courteous, knowledgeable and helpful. The jewellery is beautiful and expensive. As I leave, I say to myself – ‘I’ll come back here when it’s a big occasion, and I’m ready to spend a lot’ :-)

Why Is TBZ going for an IPO?

• The Business plan is to open an additional 43 showrooms (25 large format high street showrooms and 18 small format high street showrooms) by end FY15, which would give a total of 57 showrooms (with a total carpet area of approx. 150,000 sq. ft.) in 43 cities.
• From a strong regional player, TBZ is embarking on an aggressive phase of growth to take the business national.
• TBZ will also meet the new listing norms where promoters can hold a maximum of 75% of shares.

TBZ Financials

Industry

• The overall size of domestic Gems and Jewellery sector is pegged at Rs 87,000 crore as of 2008-09, according to a FICCI-Technopak study and is expected to grow up to Rs 183,200 crore by 2014-15, a CAGR of 10-12%. Estimates are that only 10% of this industry is the organized sector.
• Quick calculations give TBZ a rough Market share of 8.5% of the organized Indian jewellery market.
• Organized sector competition to TBZ is from Titan, Shree Ganesh, Joy Alukkas, Thangamayil and Kirtilal Kalidas, Reliance Jewels and Big Bazaar. However, TBZ’s business model is closest to Titan.
• Government recently raised the duties on Gold imports, this raises cost of gold Jewellery. Another new rule is on the requirement of PAN number for purchases of more than Rs 5 lakh.

Key Strengths of TBZ and IPO offer

• TBZ is a local trusted high quality brand, and can be leveraged by the firm.
• Strong industry experience from the 2^nd generation entrepreneur promoter.
• The price volatility in this sector due to commodity inputs like gold and diamonds appears to be well managed by TBZ in terms of their procurement systems.
• IT systems appear to be strong
• Current operations are Cash Flow positive.