QIB: 1.29 times
Non-Institutional Investors: 1.91 times
Retail: 0.68 times
Overall: 1.15 times

QIB: 0.00 times
Non-Institutional Investors: 0.67 times
Retail: 0.19 times
Overall: 0.20 times

Tribhovandas Bhimji Zaveri (TBZ) IPO which has opened for subscription from April 24, 2012, has failed to attract investors even on the auspicious day of Akshay Tritiya. The IPO has received bids only in the HNI and Retail Category which are subscribed 0.22 times and 0.05 times respectively with QIB category receiving no bids on the opening day

Earlier, CRISIL had assigned an IPO Grade 3 to Tribhovandas Bhimji Zaveri Ltd (TBZ) IPO. This means as per CRISIL, company has 'Average Fundamentals'. CRISIL assigns IPO grading on a scale of IPO Grade 5 to IPO Grade 1, with IPO Grade 5 indicating strong fundamentals and IPO Grade 1 indicating poor fundamentals.

Indian IPO Blog has posted an insight based on analysis of TBZ IPO. Click here to read Indian IPO Blog Insight on TBZ IPO!

Tribhovandas Bhimji Zaveri Ltd., an Indian top jewellery retailer, is entering the capital markets with an IPO of 16,666,667 Equity Shares of Rs.10/- each, which would remain open for subscription between April 24, 2012 and April 26, 2012. Is the jewellery retailer worth the glitter? Let's try to find out:

The Price Band for the IPO is Rs.120/- to Rs.126/- per equity share. Correspondingly, the bid lot would be 45 Equity Shares and in multiples thereof.

The objects of Tribhovandas Bhimji Zaveri Ltd. IPO are:
1. To finance the establishment of new showrooms;
2. To finance incremental working capital requirements;


IPO Rating:
CRISIL has assigned an IPO Grade 3 to Tribhovandas Bhimji Zaveri Ltd (TBZ) IPO. This means as per CRISIL, company has 'Average Fundamentals'. CRISIL assigns IPO grading on a scale of IPO Grade 5 to IPO Grade 1, with IPO Grade 5 indicating strong fundamentals and IPO Grade 1 indicating poor fundamentals. Click here to read more on TBZ IPO - CRISIL Rating


Significant Risks involved in the issue:
1. There are criminal proceedings pending against two of the company's independent Directors
2. The objects of the Issue includes the financing of the establishment of nine new large format high street showrooms in eight cities. However, interestingly, within the cities identified, the exact location of where these showrooms would be located has not yet been finalised
3. There are five third parties with the right to use the "Tribhovandas Bhimji Zaveri" name
4.The company does not register its jewellery designs under the Design Act, 2000 and may lose revenue if the designs are duplicated by competitors
5. For Fiscal 2011 and the nine months ended December 31, 2011, 94.15% and 93.69% of total turnover, respectively, was generated from concentrated regions. Hence, lack of geographical diversion can be a restriction for the company


Analysis of Financials:
Following are the financials of the company as per the Red Herring Prospectus filed by the company:


The company has managed to achieve a turnover of around Rs.1,194 Crores for FY ending 2011. The PAT  margin for the said year comes to a rather scant 3.35%. As against this, Gitanjali Gems Ltd., a listed peer, has a bit stronger position with a Turnover of Rs.5,122 Crores and a PAT margin of around 4.38%. Besides, unlike Gitanjali Gems, lack of geographical diversity and extensive global presence can also be a bottleneck for TBZ.

Although a strong brand name and experienced management can be positives for the company, investors may not digest the risk factors and not so extraordinary financial performance of the company

CRISIL has assigned a CRISIL IPO Grade of ‘3/5’ (pronounced ‘three on five’) to the proposed IPO of Tribhovandas Bhimji Zaveri Ltd (TBZ). This grade indicates that the fundamentals of the IPO are average relative to other listed equity securities in India. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy, sell or hold the graded instrument, its future market price or suitability for a particular investor

According to the grading report by CRISIL, The assigned grade reflects TBZ’s century-old presence in the retail jewellery business and the resultant strong brand recall. The grade factors in the resilience of demand for gold jewellery in India despite a significant rise in gold prices, 28% y-o-y in 2011, which has added shine to TBZ’s top line. Compared to other gold jewellery players, TBZ’s revenue mix leans towards higher-margin diamond jewellery, which bodes well for TBZ in the wake of increasing acceptance of diamond jewellery in India. The grade has also taken into account the expected increase in organised retail penetration in jewellery vis-à-vis the single-store format, which will benefit established players like TBZ. The company has steadily expanded from one store to 14 stores in the past decade

The grade is restrained by competition in the jewellery retailing market, which will likely intensify following planned expansions by regional/traditional players. TBZ too plans to expand to 22 stores by end-FY13 at a faster-than ever pace, which could throw up execution challenges even though its
strategies (regarding store location, size, format, personnel and schedule) are in place. Opening of new stores will also put pressure on profitability due to higher marketing expenses and working capital requirement. Further, with the Tribhovandas Bhimji Zaveri brand being used by other Zaveri family members, the risk of brand dilution cannot be ignored, especially if they under-perform on quality.

The Price Band for the upcoming IPO of Tribhovandas Bhimji Zaveri (TBZ) is fixed at Rs.120/- on the lower end and Rs.126/- on the upper end. The company is a leading India jewellery retailer dealing in gold jewellery, diamond-studded jewellery, platinum jewellery and jadau jewellery though 14 showrooms in 10 cities across five states

The IPO would remain open for subscription between April 24, 2012 and April 26, 2012. BRLMs to the Issue are IDFC Capital and Avendus Capital whereas the Registrar is Karvy Computershare Pvt. Ltd. Corresponding to the price band, the bid lot or the minimum order quantity for the IPO is set at 45 Equity Shares and in multiples thereof

Check back Indian IPO Blog for more on TBZ IPO!

CRISIL Research has assigned a grade of 3/5 to the proposed IPO of Tribhovandas Bhimji Zaveri Ltd (TBZ). This grade indicates that the fundamentals of the IPO are average relative to other listed equity securities in India. CRISIL assigns IPO grades on a scale of IPO Grade 1 to IPO Grade 5 with IPO Grade 1 indicating poor fundamentals and IPO Grade 5 indicating strong fundamentals

However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy, sell or hold the graded instrument, its future market price or suitability for a particular investor