Tara Jewels – Hold
Suparna / 07 Dec 2012
Tara Jewels, which tapped the primary market to raise Rs 110 crore got listed on the bourses on Thursday, Dec 6, 2012. The price band for the issue was kept in the range of Rs 225-230, and the issue price was fixed at Rs 230 per share.
Tara Jewels (TJL), which tapped the primary market to raise Rs 110 crore (excluding Rs 70 crore raised by its earlier investor Fabrikant H.K. Trading) got listed on the bourses on Thursday, Dec 6, 2012.
| Issue Information | |
|---|---|
| Promoter Of The Company | Rajeev Sheth |
| Post Issue No. Of Equity Shares(Cr) | 2.456 |
| Lead Managers | Enam Sec and ICICI Sec |
The price band for the issue was kept in the range of Rs 225-230, and finally, the issue price was fixed at Rs 230 per share. As expected, the scrip witnessed a higher listing price of Rs 242 and then moved up to touch a high of Rs 244.90. However, it could not sustain the higher levels and eventually closed the day at Rs 230, which is its issue price.
At the time of IPO analysis, we had stated that a post-listing spike could be expected in its share price as most jewellery stocks were doing well owing to the festive season. This is exactly what has happened.
As regards the response to the new issue, the first two days of TJL’s opening was very dull. On the first day, it could only fetch 0.04x bids and on the second day, this figure was 0.16x. It was only on the third day it received strong bids from all category investors, taking the figure to 1.98x (almost two times the offer). The QIB portion was oversubscribed by 1.49x and the Non-Institutional portion was oversubscribed 3.10x. Even retail investors showed an active interest, and the portion got oversubscribed by 2x.
| As On Date | Qualified Institutional Buyers (QIBs) | Non Institutional Investors (NIIs) | Retail Individual Investors (RIIs) | Employee Reservations | Total |
|---|---|---|---|---|---|
| Shares Offered | 2,790,055 | 1,184,700 | 2,764,300 | 79,777 | 6,818,832 |
| Day 1 - Nov 21, 2012 | 0 | 0 | 0.1 | 0 | 0.04 |
| Day 2 - Nov 22, 2012 | 0 | 0 | 0.4 | 0 | 0.16 |
| Day 3 - Nov 23, 2012 | 1.49 | 3.1 | 2.05 | 0.14 | 1.98 |
Objectives Of The Issue
| Financial Performance (Rs/Cr) | |||
|---|---|---|---|
| Particulars | FY12 | FY11 | % Change |
| Total Revenue | 1401 | 1143 | 22.57 |
| Total Expenditure | 1328 | 1090 | 21.83 |
| EBITDA | 133.8 | 98.3 | 36.08 |
| Interest Expense | 47.05 | 32.5 | 44.64 |
| PAT | 54.12 | 40.7 | 33.04 |
The issue proceeds of around Rs 110 crore (proceeds from the stake sale will not be received by the company) would be used to meet the expenses of establishing 20 new retail stores by FY13 and for the repayment/pre-payment of existing loans. Around 55% of the proceeds (approximately Rs 60 crore) would be used to set up retail stores, while sums of Rs 30 and Rs 20 crore would be utilised to repay or prepay loans taken from SBI and ICICI Bank respectively.
On the valuations front, hardly anything has changed since the IPO and the scrip is available at an issue price of Rs 230.
At the current levels, we recommend that investors hold the positions taken at the time of IPO. Avoid any new positions at current levels, as it would unnecessarily increase your exposure to the counter.
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