Tribhovandas Bhimji Zaveri Limited has informed the Exchange about Transcript. Transcript of Conference Call with the Investors/ Analyst
Date: 161
h February, 2024
To, The Manager, Compliance Department BSE Limited Corporate Service Department Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai- 400 001 .
Dear Sir I Madam,
The Manager, Compliance Department National Stock Exchange of India Limited Exchange Plaza, Plot No. Cl 1, G Block, Bandra-Kurla Complex, Sandra (East), Mumbai- 400 051 .
Re: Tribhovandas Bhimji Zaveri Limited . Script Code & 10: 534369 I TBZ Sub: Transcript of Conference Call with the Investors/ Analyst
The Company had organized a conference call with the Investors I Analysts on Friday, gth February, 2024 at 3.00 p.m. (1ST). A copy of transcript of conference call held with the Investors/ Analysts is enclosed herewith and the same has also been put up on the Company's Website at www.tbztheorigina l.com.The audio recording of the Conference call was submitted to the Stock Exchanges on g th February, 2024. We further confi rm that no unpublished price sensitive information was shared I discussed in the meeting I call.
The transcript is available on the following weblink:
Weblink:
We request you to kindly take the same on record .
Thanking You .
Yours faithfully, For Tribhovandas Bhimji Zaveri Limited
Niraj Oza Head - Legal & Company Secretary
Encl: as above
Tho or gino I s.nce 1864
I RIIIIOVASDAS J'\IIIWJI 7AVFII [ IWITED
“Tribhovandas Bhimji Zaveri Limited
Q3 FY'24 Earnings Conference Call”
February 09, 2024
MANAGEMENT: MS. BINAISHA ZAVERI – WHOLE-TIME DIRECTOR - TRIBHOVANDAS BHIMJI ZAVERI LIMITED
MR. MUKESH SHARMA – CHIEF FINANCIAL OFFICER – TRIBHOVANDAS BHIMJI ZAVERI LIMITED
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Tribhovandas Bhimji Zaveri Limited February 09, 2024
Moderator:
Ladies and gentlemen, good day, and welcome to the Tribhovandas Bhimji Zaveri Q3 FY '24 Earnings
Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you
to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an
operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Binaisha Zaveri. Thank you, and over to you, ma'am.
Binaisha Zaveri:
Ladies and gentlemen, esteemed shareholders and investors. A warm welcome to the earnings
call for Q3 FY '24 and 9 months FY '24 for Tribhovandas Bhimji Zaveri Limited. In a hyper
competitive marketplace, TBZ Limited has showcased resilience and adaptability, underlined
by our steady rise in profitability during Q3 FY '24 and 9 months FY '24.
Despite encountering revenue challenges, we have navigated through fluctuating gold prices and
market uncertainties with strategic acumen. This resilience is evident in our financial
performance with significant increases in key profitability metrics, with holding patterns on
revenue.
One of our operational highlights during Q3 was the inauguration of our new showroom in Vapi,
GIDC. This is in line with our strategy to judiciously enhance our presence in strategic markets.
Vapi's economic vibrancy and burgeoning consumer base makes a promising location for our
premium jewelry offering. As we look ahead, we remain committed to delivering superb
craftmanship and differentiated value to our customers, while pushing the quality growth for us
stakeholders.
Since our inception in 1864, Tribhovandas Bhimji Zaveri has been synonymous with
uncompromising quality, transparency, trustworthiness, in the Indian jewellery industry. Even
today, this reputation remains strong with a multi-generational client sale, and we are
continuously working to fortifying these pillars of traction integrity built over 159 years. I now
invite Mr. Mukesh Sharma, our CFO, to provide further insights into our financial performance
and strategic initiatives.
Mukesh Sharma:
Thank you Ms. Zaveri. Good afternoon, ladies and gentlemen. I am pleased to delve deeper into
the financial highlights of quarter 3 FY '24 and 9 months FY '24. As well as our ongoing
initiatives to drive operational excellence and sustain profitable growth.
While facing down competitive challenges in the marketplace, our focus on operational
efficiencies yielded promising results each quarter. Our gross profit margins have demonstrated
steady improvement over the last few quarters, reflecting our commitment to enhancing
profitability, while maintaining our appeal with customers through the highest standards of
quality.
In quarter 3, FY '24, we witnessed a commendable increase of 13.5 percentage in gross profit,
compared to the same period last year. Reaching to INR292.33 crores with a gross margin of
12.46%. Similarly, in 9 months FY '24, our gross profit, first by 17.31% Y-o-Y to INR235.4
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Tribhovandas Bhimji Zaveri Limited February 09, 2024
crores, with a gross margin of 2.13%. These figures underscore our ability to transcend evolving
market dynamics and optimize our product mix to drive value creation.
Our improving operational efficiency and cost management is also reflected in our steadily
improving EBITDA margins. In Q3 FY24, our EBITDA margins expanded to 6.1%, up by 77
basis points Y-o-Y, representing a notable increase compared to the previous year. Similarly,
for 9 months FY '24, our EBITDA margin stood at 5.98%, up by 158 basis points Y-o-Y.
As we navigate through the remainder of the financial year, we maintain commitment to
maintain our sales momentum through strategic expansion. Our ongoing initiatives include
optimizing our supply chain, prudent financial management and diversifying our product
offerings to cater to evolving customer preferences.
Additionally, our focus on expanding our presence through our own new stores and through the
franchise model continue to be in play. In this light, we are delighted to invite all to experience
our new stores in Vapi GIDC, which has made an encouraging beginning. Thank you all for
your participation today. Let us begin with the questions and answers.
Moderator:
The first question is from the line of Utsav, who's an Individual Investor.
Utsav:
I just like to know that is 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?
Mukesh Sharma:
See, as I've highlighted in the past also, the other companies, there's a lot of new stores addition.
So those growth does not reflect the same-store growth. Yes. In our case, as I have updated, we
are cutting down on our corporate sales, which are not with much profit. This is one of the
reasons. Some reasons are there with respect to the gold prices. So whenever there is surge in
the gold prices, the quantum goes down. We have experienced that immediately after Diwali,
there were high gold prices that has created some impact in the revenue, top line. Also, the
marriage season was shifted 15 days ahead in quarter 3 this year, which has also created some
impact on the revenue.
Utsav:
Okay And like you were planning to open 2,3 stores also, right? But only one has come up in
Vapi, right? By when can we expect the other stores to open up?
Mukesh Sharma:
Yes. So 2 more stores are under process right now, and it's going for the store CapEx. So 2
stores, we will see opening in quarter 4 or maybe early in quarter 1. . So maybe in first part of
April or maybe in later in quarter 4, we may soon introduce 2 new store openings.
Utsav:
2 new stores opening.
Mukesh Sharma:
Yes.
Utsav:
Okay. And just one more thing, right? What kind of demand you foresee for this particular
quarter because there is a certain marriage season that will also be coming up, going on and that's
coming up in February.
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Mukesh Sharma:
Yes. We are seeing a good traction in the month of January,. So we are on a Y-o-Y increase on
the Jan-month, and we see a good quarter in Q4.
Tribhovandas Bhimji Zaveri Limited February 09, 2024
Utsav:
Okay. So you've seen good uptick in January and Y-o-Y?
Mukesh Sharma:
Yes. Y-o-Y, we see a good Q4.
Utsav:
Okay. And just one more thing, last question on the side. Like the pace at which your opening
of the stores, right? It's very slow. I see that, does the margin want to get more aggressive and
where instead of opening up 2 stores, open up maybe 6, 7 stores, something like that, the
management has in mind?
Mukesh Sharma:
Yes. So we have more than 5 to 8 expression of interest with respect to the franchisee, which is
actively under negotiation right now. So which we will see the momentum getting created in FY
'24, '25. We are very cautious as we have updated in past also. We want a profitable market
share, rather than opening store every nooks and corner of the country. So we are very selective
that way. And we believe we'll have a robust growth rather than opening stores everywhere.
Moderator:
Next question is from the line of Rohit Suresh from Samatva Investments.
Rohit Suresh:
Sir, my first question would be, how is the wedding market? So I guess some of some days of
the wedding season have also come in Q4. So if you could overall give me a picture of how the
wedding market has been paying?
Mukesh Sharma:
See wedding season compared to the last year, as I said, this has shifted a little bit in Q3 as
compared to Q4. Wedding season is not that great because the gold price has played a little spoil
spot there. However, it's not as bad also. So we are seeing a flattish kind of demand in this
wedding season.
Rohit Suresh:
Got it. Okay. Sir, second, on the studded jewelry. So what will be the share for Q3 of the studded
form?
Mukesh Sharma:
Can you repeat your question?
Rohit Suresh:
In the studded jewellery, the diamonds what will be the share for diamonds in this quarter Q3?
Mukesh Sharma:
See diamond ratio has improved a little bit in this Q3. So last year, quarter 3 gold diamond ratio
was 80:20. And this year, quarter 3 has become 77:23. So 3% diamond share has increased.
Rohit Suresh:
Got it. Sir, my last question would be on the margins part. So like last 3 or 4 quarters, our
EBITDA margins have been raising in the 6% to 6.5% bracket. So for FY '25, FY '26, what kind
of margin growth or any ballpark number you have in mind, which you would like to share, that
we are targeting?
Mukesh Sharma:
Margin growth is on a upward trajectory right now. And I foresee must be going above 6.5% in
immediate quarters.
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Tribhovandas Bhimji Zaveri Limited February 09, 2024
Rohit Suresh:
And is that sustainable for the next financial year also?
Mukesh Sharma:
Very much, very much. As I said that in FY '23, '24, we have more focused on the profitability.
And less focus on the revenue side, which will get corrected in FY '24, '25, we would be focusing
both on the revenue because a lot of work has already gone into the improvement of the margin.
And cost-cutting measures have been taken, which has resulted in an increase in the EBITDA
margin as well.
Rohit Suresh:
Got it. Sir, the previous participant had asked about the expansion plans, you highlighted around
5 to 8 stores you have some expressions of interest in the franchisee part. So on setting up your
own stores, what will be the target for FY '25? Will it be 1 or 2 stores? Or are you planning to
increase that also?
Mukesh Sharma:
No, I don't deny or comment on any number on the own store side. If we get an opportunity and
if there are reasons to open the own stores,we will not shy away from opening new stores in
FY '24, '25. However, I can't commit a number on the COCO stores. But yes, on the FOFO stores
ie.e franchisee-owned, franchisee operated, we are placing more focus there. And as I said, 2
stores will very soon you'll see in quarter 4, later part of the quarter 4 or the earlier part of Q1
next year.
And there are 5 to 8 active discussions, which are currently going on. And you will very soon
see those stores also coming up somewhere near the Diwali season.
Moderator:
The next question is from Darshil Jhaveri from Crown Capital.
Darshil Jhaveri:
Sir, just wanted to ask like currently like how IPRs trajectory going? Is that we are focused more
on our margin and cost initiatives? And from FY '25, we will be able to see more focus on
strategy. So any kind of guidance for revenue for FY '25, we may have, any ballpark target like
you might close this year around INR2,300 crores. So can we what kind of target new stores
coming up should we have for FY '25?
Mukesh Sharma:
See Jewellery sector commitment on the revenue growth is a little difficult and little tricky
situation. However, we always try to get somewhere with same-store sales growth of around
15% to 20%. As we add new stores, obviously, the sales growth will be in a different percentage.
So difficult to quantify what numbers. I mean, roughly, we can resume around 15% to 20% sale
growth, we should easily see in FY '25.
Darshil Jhaveri:
So 15% to 20% easily we can see and our margins, we can say around 6.5% and maybe
dashboard also jump up a bit in operating leverage?
Mukesh Sharma:
Yes, we are hopeful that we should be able to take the EBITDA margin up also.
Darshil Jhaveri:
Perfect. Perfect, sir. So just wanted to ask currently like the market scenario, how do we see like
as per our channel set, there is some sluggishness going on right now, like demand is not
flourishing. It's not low, but it's not flourishing. So could you just give us like a brief overview
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Tribhovandas Bhimji Zaveri Limited February 09, 2024
right now, what do you see the market scenario as -- and does election play any role in terms of
demand?
Mukesh Sharma:
See election is there in sight. And unless there are policy changes from the government side, we
don't see any reason of election impacting the buying that are in demand, right? However, the
momentum of, as you know, the Indian economy is on the upward trajectory. So we don't see
momentum going away very soon. So we see that the revenue growth and this momentum to
continue in near future.
Darshil Jhaveri:
Okay. Okay. Perfect. Any kind of risk that you personally see that can dampen our speed, can
act as a speed bump to one?
Mukesh Sharma:
I don't see -- as you know, TBZ has been cautiously moving ahead in terms of the opening of
new store also. So as I said, we are more focused on the profitable share of the market. Wherein
we are cautiously opening the store evaluating every option and then going ahead with our
franchise network as well. I don't see -- personally don't see any challenge from the TBZ
prospective.
Moderator:
The next question is from the line of Bhushan Sonar, who's an individual investor.
Bhushan Sonar:
I just wanted to know of opening new showrooms in Vapi GIDC Gujarat? What kind of growth
you are seeing from that area or location, by when will the stores break even, can you throw
some light on it?
Mukesh Sharma:
See the new store in Gujarat Vapi is catering to a different geography, than what our current
store is doing. And we are seeing a good traction and good sales in that store as well, and that is
already in a profitable state. It's also our experiment in terms of opening a smaller-sized stores,
which we are actually experimenting whether this kind of smaller format franchise stores may
also work in these kind of city.
So there are various strategic reasons with which we have opened and having said that, there is
a good sales there. It's not that sale is getting impacted, having stores- 2 stores in Vapi. So we
are seeing good sales and profitable store there.
Bhushan Sonar:
Okay. Can you also talk about how you change your supply chains to make it better, especially
with current market locations?
Mukesh Sharma:
Very difficult to answer this question. See, there are various initiatives what we have taken
internally. Supply chain is also one of the parts of those strategic initiatives, what we have taken
and which is getting reflected into our gross profit margin.
Moderator:
The next question is from the line of Juhi KH from ABH.
Juhi KH:
Yes. So we are projecting 5 to 8 FOFO stores, till next Diwali. Can you throw some light on the
inventory of turnover and the revenue, which we would be expected by new focus stores?
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Mukesh Sharma:
Yes. So as the name suggests, franchisee-owned franchisee-operated, the investment in the
Tribhovandas Bhimji Zaveri Limited February 09, 2024
CapEx is done by the franchisee, the inventory investment is done by the franchisees, TBZ, of
course, from the brand side, there is a complete brand support from the TBZ side for the design,
the designing part, or the marketing side, staff training, retail related experience everything is
taken care by the TBZ. So we are creating everything, the investment and the store being run by
the franchisees.
So capital, so there's no substantial investment from the TBZ side, aside from sharing the
profitability. However, there is an investment is done by the franchisee.
Juhi KH:
What would be expected in terms of level of PBT, from these stores?
Mukesh Sharma:
Own store operations and Franchisee store operation, obviously, there is a difference, because
when we operate a franchisee store, the gross margin is shared. So there will be a slight impact
on the gross margin side. While PAT or PBT will be on a higher side because there will be 0
expense, below the gross margin line, right?
So shifting of the expenses to a sharing of our gross margin and the expense is shifted to the
PNL of the franchisee, wherein he gets a good gross margin on the inventory, but he shares the
retail expense.
Juhi KH:
So can you throw some light on, how much gross margin we would be sharing on, what would
be the gross margin would be expecting for franchisee stores at place?
Mukesh Sharma:
See, the gross margins, there's a different model for each of the franchisee in different regions
and it depends on the size of inventory, it depends on the turn what we agree with them on,
depends on how much inventory they will carry. We more focused on the what return the
franchisee would be making out of the investment. Obviously, from a company perspective, we
always focus on the return on capital employed.
And we see from that perspective, in the year 1, year 2, year 3, how the business stands, how
much is the ROI franchisee is going to make, how much ROI the company is going to make
because the primary investment would be done by the franchisees - he has to get out his ROI as
well because the investment is done by the franchisee . And we are specifically taking the people
from the non-jewellery background and who are serious about the business. So there's a lot of
factors. It would be difficult to pinpoint one margin, that would be wrong on my side because it
differs with the different franchisees.
Moderator:
I would now like to hand the conference back to the management team for closing comments.
Mukesh Sharma:
I want to express my sincere gratitude to our shareholders and investors for their continued
support. Please feel free to connect with Dickenson for any further questions or insights. Thank
you for your trust in Tribhovandas Bhimji Zaveri Limited and for being part of our growth
journey. Have a pleasant evening.
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Moderator:
Thank you very much. On behalf of Tribhovandas Bhimji Zaveri Limited, that concludes the
conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.
Tribhovandas Bhimji Zaveri Limited February 09, 2024
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