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What is IPO?
Process of selling securities to public in primary market Made with 2 types Fixed Price Issues Book building Issues Majorly done to raise Capital Process is directed towards both institutional & the retail investors
2. 3.
If the above conditions are not satisfied, then the IPO can be made only through a book-building process, provided that sixty percent (60%) of the issue size must be allotted to Qualified Institutional Buyers (QIBs).
About IPO
Offer Date
Price Band Minimum Application Reserved for QIB Reserved for Non Institutional Bidders Reserved for retail Total Amount to be raised Total No. Of Share on sale
24 26 April
Rs. 120 126 per Share 45 Shares 50% 15% 35% Rs. 200 Crore 16.7 million
Plans
To finance establishment of new showrooms To expand this to around 57 showrooms, adding 43 new ones in India by 2015
To use about Rs. 20 Crore to open 9 new large format showrooms by the end of fiscal 2013.
To finance working capital requirements The remaining amount would be used for general corporate purpose
Financial Information
In Rs. Crore Net Sales
% Change Operation Profit % Change Net Profit % Change
FY 10 885
32.3 47 11 17 63.5
FY 11 1194
34.9 87 37.2 40.4 137.6
9 Months FY 12 1117
NA 102 NA 50.5 NA
Competitors / Peers
Tanishq Rajesh Exports Gitanjali Gems Shri Ganesh Jewellery
Suraj Diamond
3.17%
10.81%
11.85%
Day 1 trading
122
120
118
116
Issue Price:
Open:
Low:
110
108
106
104
Volume:
1.16
1.29
Qualified Institutional Buyers Non Institutional Investors
Retail Investors
0.68
Anchor Investors
1.91
Strength of TBZ
Strong and trusted Brand Name
Focus to develop new design and products by understanding customer requirement with constant interaction The company has substantial experience in expanding operations and managing the launch of new showrooms. The company has its own manufacturing facilities in Kandivali with a carpet area of 5,755 sq. ft.
Weakness of TBZ
Inventory risk and gold price fluctuation is also high
Working capital situation of the company is not good Financial performance of the company is also not encouraging Peers are doing good in compare to TBZ
Threats of TBZ
There is intense competition in the jewellery retailing market
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.
Conclusion
IPO of TBZ got moderate response because: The Shares are offered quite expensive in compare to its peers As it intend to utilize 70% of its raised funds for working capital needs , this may affect the performance of the company. 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 Even though the gross margin in the gold segment is around 10.86 %, while that in the case of diamond jewellery is around 36 %, company intent to invest in gold business.
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