Tribhovandas Bhimji Zaveri’s
shares surged to a record high on Tuesday after GRT
Jewellers agreed to acquire a controlling stake in the jewellery
retailer, with investors expecting the deal to boost TBZ’s
growth prospects.
Shares of the company jumped nearly 20%to a record 366.80
rupees, hitting their exchange-allowed maximum for the day.
GRT Jewellers, one of the biggest jewellery retailers in
southern India, will acquire a 74.12% stake from the top
shareholders of TBZ for 10.34 billion rupees ($109.03 million),
or 209 rupees per share, a 31.6% discount to the stock’s closing
price on Monday.
The Chennai-headquartered jeweller will also launch a
mandatory open offer for the remaining 26% stake.
“The market is expecting a fresh leg of growth for the
company with the advent of a new promoter. The combined entity
of GRT and TBZ would have better standing in the market, along
with a stronger regional brand image,” said Sunny Agrawal, head
of fundamental equity research at SBICAPS Securities.
GRT operates 68 stores in India and one in Singapore
compared to 37 for the 162-year-old TBZ.
The acquisition would complement GRT Jewellers’ strong
presence in southern India with TBZ’s established footprint in
western India, helping the combined business expand across both
markets, according to analysts at ICICI Direct.
The deal comes as organised jewellery chains compete for
share in a fragmented market. Jewellery retailers have seen
strong revenue growth despite weaker volumes as record-high gold
prices lifted sales, while consumers increasingly shift to
branded chains.
More than 12 million TBZ shares changed hands by late
morning on Tuesday, about 6.5 times the stock’s 30-day daily
average.