Amidst bleak economic scenario, the financial market has a surprise announcement for an IPO from Tara Jewels Ltd., who will be launching its maiden offer to garner Rs.180 cr from the market. Details of the issue are as under:
Tara Jewels growth and continuing market dominance can be attributed to its variety of designs with over 46,465 designs that caters to a diverse audience across five continents and over 20 countries. Its range includes fashion, bridal and handmade bespoke jewellery.
Tara Jewels plays a significant role in jewellery exports from India to global markets and caters to retailers across the USA, UK, Europe, Australia, China, South Africa, UAE and Canada. The company is now looking at direct distribution in the growing economies i.e. India and China. The group has shifted its focus from a commodity selling approach to a branded marketing Approach. TJL currently has 30 stores and is planning to open 20 more by March 2013 to take a tally to 50 stores in India.
To part finance its retail outlet opening plans and to repay debt in part, the company is offering 79,77,778 equity share of Rs.10 each with a price band of Rs.225-230 to mobilise Rs.179.50 cr. This issue included offer for sale from existing stakeholders to the tune of Rs.70 cr and the balance by way of fresh issue of equity shares.
Issue opens for subscription on 21st November, and will close on 23rd November. Minimum application is to be made for 50 shares and in multiples thereof thereafter. CARE has assigned IPO Grade 3 to this offer indicating at ‘average fundamentals of the company”. While issue is lead managed by Enam Securities Pvt Ltd and ICICI Securities Ltd., Link Intime is the registrar to the issue. Its current equity capital of Rs.19.80 cr consists of two bonus issues in the ratio of 1 for 2 in the year 2006 and 2012.
On the performance front, the company has (on consolidated basis) posted an average EPS of Rs.24.80 for last three fiscals and has NAV of Rs.157.65 as on 31st May, 2012. This translates the offer price at a P/E of around 9 (against industry average of 17 plus) and at around 1.5 P/BV. Thus the pricing looks reasonable and considering the fancy of jewellery stocks modest investment is recommended for listing gains.