The Indian gems and jewellery industry comprises gold and silver jewellery, diamonds, coloured stones and pearls. For decades, gold jewellery has continued to dominate the Indian market, followed by platinum and diamond jewellery. The Indian gems and jewellery industry is one of the largest in the world, with a market size of over USD 60 billion. It is also one of the fastest growing sectors, expected to reach a size of USD 100 billion in the next three years. It accounts for nearly 28% of global jewellery consumption, around 7% of the Indian GDP and 15% of total merchandise exports. The industry is also a major forex earner for the country, contributing nearly USD 33 billion during the last financial year. India is also the world’s largest cutting and polishing centre for diamonds, exporting around 90% of the cut and polished diamonds to major countries around the world. A few government policies like demonetisation and rollout of GST had hurt the industry in 2017-18, impacting gold jewellery sales. Tighter bank credit and higher scrutiny of borrowers in the wake of rising banking frauds saw a drop in demand, impacting sales. Lower offtake due to demand shrinkage in UAE, Hong Kong and US were also major contributory causes for dip in overall exports for the industry. The blue-chip Tata company, Tanishq is of course the best in the country in the jewellery space and is a market leader. In the small cap category space, Tribhuvan Bhimji Zaveri Ltd is a company which merits a review on a fundamental basis in the current market scenario, where volatility can be expected due to impending elections and slow global growth. Tribhuvan Bhimji Zaveri (TBZ) is an Indian brand synonymous with jewellery for weddings, celebrations and festive occasions. With quality workmanship, innovative design and long standing trust, TBZ has created a brand that spans over 150 years. It had shook up the Indian jewellery market by offering customers a full value gold buy-back scheme with every jewellery piece sold and also introducing 100% hallmarked jewellery in the country. The company posted sustained revenue growth and strong profitability for Q3FY2019. Total income from operations increased 8% to Rs 591.75 crore, EBIDA increased by 33% to Rs 30.14 crore, while PAT increased by a whopping 50% to reach Rs 11.11 crore. The management is quite optimistic on the future outlook of TBZ sales and operating margins wherein they expect it to grow on a sustained basis on the back of expanding new stores and controlled operating costs. The TBZ stock is heavily fancied by Mumbai based analysts and brokers, who advise a strong buy at the current market price of Rs 57 with a target price of Rs 85 in the next one year time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.