High valuations, weak market: TBZ hammered on listing day

Mumbai-based jewellery retailer Tribhovandas Bhimji Zaveri (TBZ) was today hammered on the bourses on day one of listing due to high valuations and weak market conditions.

The stock started trade at Rs 115 (a price that decided in pre-opening session) on both exchanges, down more than 4 percent from its issue price of Rs 120 a share. As the trade progressed, the scrip saw some more selling pressure and was trading at Rs 112.10 on the BSE at 1035 hrs.

TBZ's IPO closed on 26 April 2012 and got bids for 1.62 crore shares and was subscribed 1.15 times. Reuters

According to Udayan Mukherjee, managing editor of CNBC-TV18, there is no reason to buy the stock. "The issue went through just about at a Rs 120, but it's trading at close to 11-12 times current years earnings. In this kind of a market environment, why would you buy a 7 percent margin jewellery company, when for the same multiple you can buy ICICI Bank? he said.

On the BSE, the stock touched a high of Rs 119.80 and low of Rs 110 in early trade; which was trading at Rs 112, down 6.67 percent from issue price.

As Firstpost columnist VS Fernando, notes , TBZ's IPO price does not exude much optimism. "Glittering pedigree alone can't justify higher discounting."

TBZ's IPO closed on 26 April 2012 and got bids for 1.62 crore shares and was subscribed 1.15 times. The company had priced the initial public offer (IPO) at the lower end of Rs. 120 to Rs. 126 per share price band.

Category-wise, the qualified institutional buyers (QIB) portion was subscribed 1.29 times, the non-institutional investors category was subscribed 1.91 times and retail individual investors was subscribed 0.68 times.

TBZ raised Rs 200 crore via public issue, out of which Rs 30 crore contributed by anchor investors namely HSBC Global Investments, Credit Suisse (Singapore) and HSBC India Alpha (Mauritius) Ltd.

TBZ is a well-known and trusted jewellery retailer in India. The company mainly sells gold and diamond-studded jewellery along with other products like platinum and Jadau jewellery across its showrooms. The company retails its jewellery through 14 showrooms in 10 cities.It plans to open 44 more showrooms by the end of Fiscal 2014 in 43 cities across 14 states.