Friday, June 15, 2012

Analyst assigns buy rating

An analyst started coverage of Tribhovandas Bhimji Zaveri Ltd. (TBZ) with a 'buy' recommendation and a target price of $2.84 (INR 158) per share.

“TBZ is a high-growth potential story in the organized Indian jewelry sector backed by strong brand, innovative ability and aggressive expansion plans,” said Abhijeet Kundu, analyst at Antique Stock Broking Ltd., which owns company shares.

TBZ currently operates 14 retail stores and plans to add 43 showrooms by the end of fiscal year 2015. Kundu stated that this is likely to drive the company’s sales at a compound annual growth rate (CAGR) of 42 percent to about $503 million (INR 28 billion) during the next two years.

Kundu projected TBZ to record strong earnings growth with a CAGR of 52 percent to about $24 million (INR 1.33 billion) during the period. The company’s profit after tax margins would experience consistent improvement during the next three years with the application of the gold lease model, while its interest outgo is expected to drop in the next two years, improving the net margins, he explained.

The jewelry retailer’s stock closed up 0.2 percent at $1.94 (INR 108.25) per share Friday on the Bombay Stock Exchange.

For the fiscal year that ended on March 31, 2012, TBZ reported that group net sales rose 16 percent year on year to around $249 million (INR 13.85 billion) while net profit jumped 46 percent to $10.3 million (INR 572.4 million).

The company raised approximately $36 million (INR 2 billion) in April through its initial public offering ‎‎(IPO) of 16.7 million equity shares, including the share allotment to anchor investors.

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