The shares of jewellery companies generally receive very poor discounting and hence are not too fancied. Shares of Gitanjali Gems and Shree Ganesh Jewellery are trading at price to earnings multiples that are in single digits and hence paying a price to earnings multiple in excess of 12 times (post issue) for the shares of TBZ may not justified. The price to book value post issue also works out to around 2.27 which is expensive.
The business also is extremely competitive, though it must be admitted that the company has strong brand equity, especially in Mumbai.
Gold and jewllery has over the last few months lost sheen and the use of PAN Card for any gold transaction over Rs 5 lakhs has also deterred investors.
Some of the strengths of the company include its strong brand equity and its long standing presence in the business. The company was awarded the 'Readers Digest Trusted Brand Asia' in the category of 'Jewellery Shop' in 2006, 2007 and 2008.
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