Traditional jewellers are outperforming most blue chips on stock market
Gold may not match the Sensex in investment returns in 2012, but traditional jewellers such as PC Jewellers, Tribhovandas Bhimji Zaveri,Gitanjali Gems and Tara Jewels are outperforming most blue chips on the stock market.
Investors have taken a liking to jewellery houses, which are expanding their retail presence across the country to cash in on a rise in consumption across cities, especially by young brand-conscious consumers.
PC Jeweller and Tara Jewels got listed in December with successful initial public offerings while Tribhovandas Bhimji Zaveri entered the stock market in May.
While the company's stock price has double since its listing, the Sensex has grown only 18% since then.Gold prices rose 9.5% in 2012, while the BSE sensitive index of top 30 shares gained 26% in the year.
Jewellery retail in the country has largely been an unorganised affair with 85% of the market still controlled by local and regional players. While the market might be growing at 15% a year, the organised part is speeding ahead clocking a growth of 40-50% a year.
"What we are seeing is a big shift from unorganised to organised jewellery retail," says Balram Garg, managing director and chief executive officer of Delhibased PC Jeweller, which had a turnover of Rs3,000 crore in 2011-12. It plans to expand its presence from 30 stores currently to about 50 by 2014. It will add over 100,000 sq ft of retail space across India, he says.
Tribhovandas Bhimji Zaveri plans to invest Rs1,200 crore over the next two years to ramp up its retail presence significantly, from 21 stores today to about 57 across tier I and tier II cities. "We want to expand pan India now," its chief executive officer RK Nagarkar said.
Analysts say that the organised players are gaining at the cost of local jewellers. "With the brand becoming important for consumers, limited location jewellery players are loosing sheen," Bhavya Gandhi, analyst atPhillip Capital, says.
Mehul Choksi, chairman of Gitanjali Group, says people are a lot more conscious of quality today and prefer to buy from organised retailers who can guarantee quality and are more transparent.
Gitanjali, one of the first jewellers to get listed back in 2006, recently undertook a restructuring exercise creating three verticals under holding company Gitanjali Gems — the diamond and jewellery manufacturing business that includes exports; the domestic branded jewellery that houses retail and all its brands such asNakshatra, D'Damas, Sangini, Gili and Asmi; and the international distribution and retail business.
The restructuring, says Choksi, was done to enhance shareholder value, and now the company is talking to strategic investors. Gitanjali has grown its retail presence from 185 company owned stores in 2009-10 to 233 stores last fiscal.
Gitanjali has consistently outperformed the Sensex. Since its listing six years ago, the share price of Gitanjali has tripled while the Sensex has grown 78%.
The big jewellers are also paying attention to the ambience of their stores to attract the youth. PC Jewellers' Garg says, "Young customers hesitate to enter traditional looking jewellery stores, which is why we need to modernise."
The younger customer is also more interested in buying diamond jewellery, which has been growing fast over the last few years, says Garg who expects his company to cross the Rs4,000-crore turnover mark this year.
Source : RAVI TEJA SHARMA,ET BUREAU
Traditional jewellers are outperforming most blue chips on stock market
Gold may not match the Sensex in investment returns in 2012, but traditional jewellers such as PC Jewellers, Tribhovandas Bhimji Zaveri,Gitanjali Gems and Tara Jewels are outperforming most blue chips on the stock market.
Investors have taken a liking to jewellery houses, which are expanding their retail presence across the country to cash in on a rise in consumption across cities, especially by young brand-conscious consumers.
PC Jeweller and Tara Jewels got listed in December with successful initial public offerings while Tribhovandas Bhimji Zaveri entered the stock market in May.
While the company's stock price has double since its listing, the Sensex has grown only 18% since then.Gold prices rose 9.5% in 2012, while the BSE sensitive index of top 30 shares gained 26% in the year.
Jewellery retail in the country has largely been an unorganised affair with 85% of the market still controlled by local and regional players. While the market might be growing at 15% a year, the organised part is speeding ahead clocking a growth of 40-50% a year.
"What we are seeing is a big shift from unorganised to organised jewellery retail," says Balram Garg, managing director and chief executive officer of Delhibased PC Jeweller, which had a turnover of Rs3,000 crore in 2011-12. It plans to expand its presence from 30 stores currently to about 50 by 2014. It will add over 100,000 sq ft of retail space across India, he says.
Tribhovandas Bhimji Zaveri plans to invest Rs1,200 crore over the next two years to ramp up its retail presence significantly, from 21 stores today to about 57 across tier I and tier II cities. "We want to expand pan India now," its chief executive officer RK Nagarkar said.
Analysts say that the organised players are gaining at the cost of local jewellers. "With the brand becoming important for consumers, limited location jewellery players are loosing sheen," Bhavya Gandhi, analyst atPhillip Capital, says.
Mehul Choksi, chairman of Gitanjali Group, says people are a lot more conscious of quality today and prefer to buy from organised retailers who can guarantee quality and are more transparent.
Gitanjali, one of the first jewellers to get listed back in 2006, recently undertook a restructuring exercise creating three verticals under holding company Gitanjali Gems — the diamond and jewellery manufacturing business that includes exports; the domestic branded jewellery that houses retail and all its brands such asNakshatra, D'Damas, Sangini, Gili and Asmi; and the international distribution and retail business.
The restructuring, says Choksi, was done to enhance shareholder value, and now the company is talking to strategic investors. Gitanjali has grown its retail presence from 185 company owned stores in 2009-10 to 233 stores last fiscal.
Gitanjali has consistently outperformed the Sensex. Since its listing six years ago, the share price of Gitanjali has tripled while the Sensex has grown 78%.
The big jewellers are also paying attention to the ambience of their stores to attract the youth. PC Jewellers' Garg says, "Young customers hesitate to enter traditional looking jewellery stores, which is why we need to modernise."
The younger customer is also more interested in buying diamond jewellery, which has been growing fast over the last few years, says Garg who expects his company to cross the Rs4,000-crore turnover mark this year.
Source : RAVI TEJA SHARMA,ET BUREAU
