TBZ - Tribhovandas Bhimji Zaveri Limited Share Price

Management Outlook:
TBZ's management remains optimistic about future growth, emphasizing resilience in a competitive market. They aim to balance strategic expansion with profitability, focusing on operational efficiency and prudent financial management. The company plans to open 2-3 new stores (own and franchise) in Q4 FY24 or early FY25, targeting "profitable market share" over rapid scale. Management expects improved revenue momentum in Q4 FY24 (boosted by January sales uptick) and targets 15-20% revenue growth in FY25 alongside EBITDA margin expansion to 6.5%+. Diamond jewelry demand is rising, with its contribution increasing to 23% in Q3 (vs. 20% YoY).

Major Points:

1. Financial Performance:

   • Gross profit rose 13.5% YoY in Q3 (margin: 12.46%); EBITDA margin expanded to 6.1% (+77 bps YoY).
   • Revenue declined due to gold price volatility, reduced low-margin corporate sales, and a delayed wedding season.

2. Expansion Strategy:

   • Opened a new showroom in Vapi (Gujarat) and plans 2 more stores soon.
   • Actively negotiating 5-8 franchise (FOFO) partnerships, prioritizing profitability over aggressive store count growth.

3. Demand & Margins:

   • Wedding demand in Q3 was "flattish" due to high gold prices, but Q4 is expected to improve.
   • Margin growth driven by cost optimization, supply chain improvements, and a shift toward higher-margin diamond jewelry.

4. Market Sentiment:

   • No significant election-related demand risks anticipated; long-term optimism tied to India's economic growth.

5. Franchise Model:

   • Focus on FOFO stores to minimize capital expenditure; franchisees bear inventory and operational costs while TBZ provides branding/design support.

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Question 1: "I just like to know that there's a degrowth in the revenue, while the other company has shown a growth in the jewellery states? Any reason why our companies see the degrowth in the revenue?"
Answer Summary: Revenue decline attributed to competitors' new store expansions (not same-store growth), reduced low-margin corporate sales, gold price surges post-Diwali impacting volumes, and a 15-day shift in the wedding season to Q4.

Question 2: "By when can we expect the other stores to open up?"
Answer Summary: Two new stores planned for Q4 FY24 or early Q1 FY25, with 5"“8 franchise stores under negotiation for FY25. Expansion is cautious, prioritizing profitability over rapid growth.

Question 3: "What kind of demand you foresee for this particular quarter because there is a marriage season...?"
Answer Summary: Strong January sales indicate a positive Q4 outlook, with expectations of year-on-year growth driven by wedding season demand.

Question 4: "Does the management want to get more aggressive [with store openings]?"
Answer Summary: Focus remains on profitable market share, with 5"“8 franchise stores in active discussions. Selective expansion avoids "nooks and corners," prioritizing sustainability.

Question 5: "How is the wedding market?"
Answer Summary: Wedding season demand is flat YoY due to high gold prices, but not severely impacted.

Question 6: "What will be the share of studded jewellery in Q3?"
Answer Summary: Diamond jewelry share improved to 23% (vs. 20% YoY), reflecting a shift in product mix.

Question 7: "What EBITDA margin target is TBZ aiming for?"
Answer Summary: Margins are on an upward trajectory, expected to exceed 6.5% in near quarters and remain sustainable via cost optimization and operational efficiencies.

Question 8: "What is the franchise store expansion plan?"
Answer Summary: Franchisee-owned stores (FOFO) prioritized in FY25, with 5"“8 in discussion. Capital expenditure and inventory handled by franchisees; TBZ focuses on brand support.

Question 9: "What revenue growth guidance exists for FY25?"
Answer Summary: Targeting 15"“20% YoY revenue growth via same-store sales and new outlets, with improved margins from operating leverage.

Question 10: "How will elections impact demand?"
Answer Summary: No significant election-related demand risk anticipated; positive economic momentum expected to sustain growth.

Question 11: "How is the new Vapi store performing?"
Answer Summary: Vapi's smaller-format store shows promising traction and profitability, serving as a strategic experiment for future expansions.

Question 12: "How are franchise store margins structured?"
Answer Summary: Franchise models vary regionally, sharing gross margins while franchisees bear expenses. Focus on ROI for both parties, avoiding fixed margin commitments.