Fiscal 2012-13 has begun on a cautious note as far as secondary market is concerned. But for primary market, it is Tribhovandas Bhimji Zaveri (TBZ)'s IPO that is breaking the ice and taking the onus to open the activity for the fiscal. No doubt after successful listings of recent issues of C Mahendra and Thangamail etc, this IPO was eagerly waited by the primary market investors.
145 year old jeweler is making a public offer of 16666667 equity share of Rs. 10 each within a price band of Rs. 120-126 via book building offer. The issue opens on 24.04.12 and closes on 26.04.12. With this offer, company is diluting little over 25% of post issue equity. Issue is lead managed by IDFC Capital and Avendus Capital and Karvy Computershare is the registrar to the issue. CRISIL has assigned IPO Grade 3 to this offer indicating at 'average fundamentals' of the company. Post issue shares will be listed on BSE and NSE. Minimum application is to be made for 45 shares and in multiples thereon thereafter. Company hopes to mobilize around Rs. 200-210 crore with this offer that will be utilized for expansion of its retail outlet and other general corporate requirements.
In October 2010 company issued bonus shares in the ratio of 4 shares for every 1 share held. Thus equity is increased to Rs. 50 crore. With this offer, the equity will rise to Rs. 66.67 crore.
On performance front, TBZ posted net profit of Rs. 16.94 crore and Rs.40.42 crore respectively for the fiscal 2009-10 and 2010-11 on a turnover of Rs. 885.25 crore and Rs. 1194.46 crore. For the first three quarters ended 31.12.2011 it has earned net profit of Rs. 50.50 crore on a turnover of Rs. 1118.58 crore. Based on this the company is likely to post an EPS of Rs. 10 plus on expanded equity base. Thus the IPO is priced at a PE of 12 and around 3.8 on P/BV basis, which looks a bit aggressive.
As for the BRLM's performance is concerned, IDFC Capital brought 13 issues out of which 5 issues failed to give returns to investors on debut day, whereas Avendus Capital brought 1 IPO that failed to give returns on debut day.
Conclusion / Investment Strategy
Gold jewellery retail biz, in which this company is mastering, was till this year dependent on cash purchases in a big way. Under new tax laws any purchase above Rs. 5 lakh PAN number is a must now and thus this biz might see some down trend. However, management has welcomed this move saying that it will bring in more transparency in this high profile business. Looking at the fancy enjoyed by such counters on the bourses, modest investment for long term investment recommended.
IPO Review Author
About Dilip Davda
Dilip Davda, a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Corporate India, Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.
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