"We are cautious on Tribhovandas Bhimji Zaveri as it is not delivering decent set of results which its peers are doing," says Akash Jain, Vice-president, Equity Research at Ajcon Global Services.
We are cautious on Tribhovandas Bhimji Zaveri as it is not delivering decent set of results which its peers are doing. The company witnessed meagre 1.4percent sales growth in Q3FY18 despite addition of 1 franchised store in October which has upfront sales of Rs 20 crore. Q3FY8 PBT stood at Rs 11.5 (Y-o-Y increase of 44 percent) owing to decline in interest cost by 16.4 percent despite a 68.2 percent decline in other income. Adjusted PAT at Rs 7.4 crore was up 0.5 percent on tax provision of Rs 3.2 crore (nil in Q3FY17 due to set off of losses).
TBZ plans to open 5 ‐ 6 company operated stores in malls in coming 12 months which will increase rental, inventory and manpower cost. TBZ enjoys strong brand identity and strong brand recall among its customers. TBZ re‐launched Churchgate store with almost double the store area (1230 sq.ft. to 2350sq.ft). It also a mall store at Phoenix, Mumbai (Lower Parel 1000sq ft) and started fifth franchisee store in Bhopal (1850sq.ft).
TBZ has guided to open 5‐6 franchise stores every year for the next 2 years mainly in smaller cities and to open 2 more mall stores by Q1FY19. The company continues with its efforts to expand its retail presence in an asset-light manner.
We expect 20 percent contribution from franchisee stores by FY20. It is better to look at Q4FY18 numbers and management outlook on future and then take a call to take position for a long term horizon.Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.