Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Should you invest in this newly listed jeweller? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Mar 20, 2013

    Should you invest in this newly listed jeweller?

    Jewellery retailing in India is expected to grow at a CAGR of 10% to 12% up to 2015. Jewellery contributes to around 6% of total retail trade in the country. Recent years have witnessed a gradual shift of consumer interest towards branded variety of jewellery from the traditional ones. This is because of higher disposable incomes and rising aspirations of rising middle class population.

    Taking cue from this rising consumer interest, branded jewellers are expanding their operations in a big way. Such expansions call for huge investments too. Thus, recently, three jewellery retailers namely TBZ, Tara Jewels (Tara) and PC Jewellers (PCJ) opted for the IPO route to source funds for their expansion plans. In our series of articles starting today, let us see how have these companies performed in the recent past, especially in the quarters following the IPO. We will also see how their stock prices have performed post listing and whether the current valuations provide opportunities for investing in these stocks. In today's article, we will discuss their background.


    Firstly we will see how these companies compared with each other at the time of their IPO in terms of past experience, reach and product mix.

    Newly listed jewellers: A comparison
      TBZ Tara PCJ
    Established in 1864 2001 2005
    No of years in jewellery retailing 148 2 7
    Geographic coverage at the time of IPO
    No of stores 14 30 30
    No of cities 10 19 23
    No of states 5 5 8
    Regions covered Maharashtra, South India North, west and central India North and central India
    Product mix (Mar 2012)
    Exports as a % of total sales NA 81% 33%

    No of years in jewellery retailing

    Trust is an important factor which customers consider while making jewellery purchases. Companies having more experience in business will garner more trust from their customers. In this regard, TBZ is far ahead of the other two with almost 150 years of jewellery retailing experience. The company opened its first showroom in 1864. Tara and PCJ although established jewellery business in 2001 and 2005 respectively, are relatively new entrants to the retailing part of it.

    Geographic diversification

    These traditional jewellers have usually been more of a local phenomenon. However, these days they are opening stores across the country. Having a more geographically wider market ensures benefits of diversification. It protects companies from region specific issues. Both TBZ and Tara were present in 5 states at the time of their IPOs. However, PCJ which mainly focussed on the markets of Delhi and NCR had stores in 8 north Indian states. Also, PCJ has relatively fewer stores per city that it operates in. Having country wide presence also helps in building brand value of the company.

    Product mix

    One more important aspect to look at is the quantum of export sales as compared to the total sales of the company. We notice that almost 80% of Tara's sales are from exports to various countries. This makes it highly vulnerable to economic conditions in these countries as also expose it to forex fluctuation risks. We also observed that more than 70% of these exports come from top 10 customers thereby giving rise to concentration risks.


    We observe that TBZ had far lesser no of stores (14) as compared to Tara (30) and PCJ (30). The company thus has the potential to build on its rich experience in the business and open more stores in newer states and cities/towns. Also, Tara is likely to face issues arising out of economic uncertainties in the countries that it exports to including the US (majority exports to the US. In our next article, we will do a careful analysis of the past financial performance of the company and their future growth strategy to find out which amongst these is the best.



    Equitymaster requests your view! Post a comment on "Should you invest in this newly listed jeweller?". Click here!


    More Views on News

    Titan: Jewellery Business Lights up the Quarter (Quarterly Results Update - Detailed)

    Aug 10, 2017

    However, growth at these levels are unlikely to be sustainable.

    Avenue Supermarts Ltd. (IPO)

    Mar 7, 2017

    Equitymaster analyses Initial Public Offering (IPO) of Avenue Supermarts Limited.

    Titan: Beating the Demonetisation Blues (Quarterly Results Update - Detailed)

    Feb 14, 2017

    Titan Industries declared its results for the third quarter of financial year 2017 (3QFY17). While topline growth was 14.7% YoY, net profit grew by 13.1% YoY during the quarter. Here is our analysis of the results.

    Titan: Margin Improvement Saves the Day (Quarterly Results Update - Detailed)

    Nov 16, 2016

    Titan Industries declared its results for the second quarter of financial year 2017 (2QFY17). While topline growth was flat, net profit grew by 23.5% YoY during the quarter. Here is our analysis of the results.

    Titan: High Gold Prices Spoil the Show (Quarterly Results Update - Detailed)

    Aug 9, 2016

    Titan Industries declared its results for the first quarter of financial year 2017 (1QFY17). The company reported 3.3% YoY increase in sales, while net profit fell by 16.3% YoY during the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms