Here are the Analysts / Brokerage Recommendations of Tribhovandas Bhimji Zaveri Limited (TBZ) IPO,
Issue Period:Apr 24 – Apr 26 , 2012
Price Rs120-126;
Issue Size Rs200-210cr
Ajacon Global Analyst Akash Jain has the following Recommendation,
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.
Sharekhan has the following Views
At the upper end of the price band (Rs126 per share), the company is valued at 12x its M9FY2012 annualised post-issue earnings and 8.7x its one-year forward (FY2013 earnings), based on our rough cut estimates for FY2013. A growing organised jewellery market (growing at an upward rate of 25%) with TBZ’s strong brand equity strength, experienced management, consistent financial track record and attractive return ratios makes us positive on the company’s future prospects.
SMC Views on TBZ IPO are as under,
The fundamentals of the company look average. It has old presence in the retail jewellery business which has resultant into strong brand recall. As the company plans to expand to 22 stores by end-FY13 at a faster-than ever pace. As it is the family business of the company, the risk of brand dilution, especially if they underperformed on quality, cannot be ruled out. Moreover, the new tax policy where the customer has to give his/ her PAN number on purchase made above `5 lakh is likely to hinder the business. Hence it is recommended that any investor with long time horizon can go for this issue.
KR Choksey Justifies the AVOID Rating on the IPO of TBZ with the following note,
The annualized earnings on diluted equity for FY12E is Rs 10.1 valued at a P/E of 11.9-12.5x. We believe the company is priced on higher side with peers trading at P/E of 4-7x FY12E earnings. Hence we recommend to “AVOID” the issue.
ICICI Direct Analysts Bharat Chhoda and Dhavni Modi think its FULLY PRICED,
At the IPO price band of | 120-126, the stock is available at 11.9x–12.5x annualised 9MFY12 post issue diluted EPS. We believe the issue is fairly priced and does not leave any upside potential for investors in the short term. In our opinion, there are no major negatives. Nonetheless, the positives have also been factored in the pricing.
Nirmal Bang IPO Analyst Ruchita Maheshwari asks investors to AVOID the IPO
The company is planning to open 43 retail showrooms at an aggressive pace by the end of FY15E, there is a chance that the company may face some execution challenges even though all the strategies are in place. We also feel that the opening of new stores will mount pressure on profitability due to time taken for break-even of new stores, higher marketing expenses and working capital requirement. A TBZ share is offered at 12.46x P/E calculated at higher band and 11.84x at lower band of price for FY12E which we feel is quite expensive compared to its peers. We feel that investors can “AVOID” the IPO.
