Tara Jewels is entering the capital market on November 21, 2012 with an IPO of Rs 1.79 billion, in the price band of Rs 225 to Rs 23 a share, with face value of Rs 10. Issue closes on November 23. Of this, fresh issue is of Rs 1.09 billion and offer for sale is of Rs 700 million. Over and above, a re- IPO placement of 1.8 million shares were made September 9, 2012, at Rs 225 a share, for Rs 405 million, to Crystalon Finanz AG.
The company is an integrated player in the jewellery industry, with company having its 30 stores, carrying out retail operations under the brand Tara Jewellers. The company is having four manufacturing units, with 3 located in Mumbai and 1 in China. For year ending March 31, 2012, total income of the company was placed at Rs 14 billion, with PAT at Rs 541.3 million, resulting in an EPS of Rs 30, on equity base of Rs 180 million. Book value a share, stood at Rs 154 on March 31, 2012.
The company is now planning to open 20 stores in 18 cities by March, 13 which, requirement is estimated at Rs 660 million. In addition, Rs 500 million is being mobilized for repayment of loans to bankers of the company.
SP Tulsian, investment expert and editor & CEO, Premium Investments, commenting on the public issue of Tara Jewels said, "Operations of the company are highly working capital intensive, as can be seen from its financials. With 30 stores, it had an inventory of Rs 5.89 billion and receivables of Rs 4.67 billion, which are largely financed by bank finance of Rs 5.36 billion, having availed from 12 banks. Receivables of Rs 4.67 billion, represents for about 5 months, on export sales of Rs 11.34 billion in FY12. Domestic sales of Rs 2.65 billion in FY12 are largely from 30 stores, which need to be ramped up going forward, as annual average of Rs 90 million is seen quite low.
Still, considering a good foothold having gained in the last 3 years, company is likely to improve its retail sales mix in FY14. Share at Rs 230, at the upper band is recommended for investment, as it can give listing gain of about Rs 15 and a gain of about 20% in next 6-8 months."
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