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Tribhovandas Bhimji Zaveri Ltd
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Ladies and gentlemen, good day, and welcome to the Tribhovandas Bhimji Zaveri Q2 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Binaisha Zaveri, full time Director of the Tribhovandas Limited. Thank you, and over to you, ma'am.
Good afternoon, esteemed guests and shareholders. It's my pleasure to welcome you to the earnings call of Tribhovandas Bhimji Zaveri Limited for the second quarter and the first half of the fiscal year 2023, '24. In the Indian jewelry market, a landscape both dynamic and challenging, our legacy of over 159 years stands as a guidance beacon. At TBZ, we're not nearly a brand but a legacy, seamlessly integrating our rich culture and heritage with evolving aspirations of our patrons.
Despite facing market challenges in Q2 FY '24 and first half FY '24, TBZ has started a resilient growth path, a clear reflection of our unwavering commitment to quality, robust margin protection and a deep resonance with our customers' desires.
Our recent collections are a testament to this approach, blending our historical legacy with contemporary design and captivating our clientele. With the upcoming inauguration of our new store in Vapi, Gujarat, we are poised to bring our timeless elegance and unparalleled craftmanship to our new markets and generations.
In a world marked by geopolitical uncertainties and economic shifts, our steadfast strategy focuses on elevating our brand desirability in the vibrant Indian market. This will be realized through our relentless commitment to product excellence and superior distribution. Our team's dynamic energy and unmatched creativity are pivotal in this journey, setting us on a path to meet market expectations and quantifying our position in this sector.
As we fall ahead, our resilience rooted in strategic achievement and team dedication, we will be key to delivering of steady growth and success. I extend my gratitude to your continued trust in us.
I now invite our CFO, Mr. Mukesh Sharma, to provide further insight into our financial performance.
Thank you, Ms. Binaisha. Good afternoon to everyone present here today. In the dynamic realm of India's jewelry market, the narrative of TBZ Limited in the first half of FY '24 is a compelling story of resilience and strategic innovation.
We faced challenges head on from intense market competition to pressure for discounts. Our response has been marked by a blend of creative design and uncompromising quality, enabling us to maintain strong margins and conquer discount pressure effectively.
Our financial journey [indiscernible] challenged by a 5.9% decrease in total operating income to INR 1,116.7 crores is one-off time. We achieved a substantial 49.4% growth in EBITDA during H1 FY '24 and an impressive 137% increase in profit before tax. These figures simulate more than just financial success, they represent our commitment to excellence in both operation and design.
In quarter 2 FY '24, despite a decrease in operating income, INR 2,480.6 crores, we saw our strategy bear fruit with a [indiscernible] 3.4% increase in EBITDA and significant rise in PBT and PAT of 60.6% and 63.6%, respectively. This performance is a testament to our ability to stick to the game plan even in the challenging times.
Looking ahead, we are excited about our upcoming store opening in Vapi, Gujarat, by quarter 3 FY '24. This new venture is not just in expansion. It's a step forward in our continuous journey of growth and excellence. It represents our unwavering commitment to brining the finance jewelry rooted in Tribhovandas Bhimji Zaveri Limited to a wider audience.
Allow me to share a quick story that encapsulates our [indiscernible]. Recently, our team co-opted a bespoke piece inspired by traditional Indian motifs, but without contemporary test for a client. The overwhelming appreciation from the client was not just for the jewelry but for keeping the essence of our rich culture alive in our creation. This is what drives us, the passion of creating exceptional jewelry that resonates with our customers' hearts and heritage.
As we move forward, our focus remains on sustaining growth through operational efficiency and our passion for creating exceptional jewelry. Your support and trust inspires us to reach new heights. Thank you once again for joining us today. I am now ready to take your questions and engage in further discussions.
[Operator Instructions] The first question is from the line of Mr. Sonal Jain, who's an individual Investor. Please go ahead.
Hello. Good afternoon, everybody. Hi, so I have 2 sets of questions. The first one is that you mentioned about the new [indiscernible] and a plan for the wedding season on the midterm growth. Can you please provide more information on the company's growth strategy and expansion plans for the near future?
Yes. So we have opened a new store at the first week of November in Vapi. There's quite a good demand we observed there. And therefore, we opened our second store. We do have a plan, as I have been always sharing with you all, that we do have a plan to expand both through company's own stores as well as the franchisee network. You will very soon see some new stores coming up in different geographies as well.
We have a range of wedding collections. Now the wedding are lined up price everyone knows, the entire wedding season we are filled with stocks and lots of new designs we have added into our inventory, and we are hopeful for a good wedding season in quarter 3.
Sure. My second question is somewhere there. Could you please also provide you details on the growth and strategy related to the Diamond segment? And how it is compared to the gold segment in terms of margin ratio?
Yes. So the margin between the gold and diamond are quite a big amount of gap. We have been seeing there is quite a good amount of growth in our diamond jewelry segment. And our diamond ratio to the gold sales ratio has increased by 5% to 6%. So we have almost the 70-30 gold and diamond ratio in our sales, which is reflecting into our margin as well.
[Operator Instructions] The next question is from the line of Utsav, who's an individual investor.
Sir, I just wanted to understand like how many stores are you planning to open up in the next half year?
In the first half, we have opened 1 store.
Any next coming out. How many stores are like in the pipeline that we can see?
I can't reveal the exact number, but I can say a broad range of numbers that we are seeing anywhere between 3 to 5 stores we are going to open in the H1 second half of this year.
Second half, Okay. And just want to get an idea like the wedding season has come even we see have closed like the [indiscernible] and the value is coming up. So what kind of sales growth we can see this quarter or the next half year?
So see, the -- because of the very high prices of the gold, the demand was sluggish at the beginning of the season. But now this is now picking up. It's difficult to outline a particular specific number in terms of the growth, but we are seeing at least flattish sale or a little bit growth over the last year.
And the margins will be sustainable, right?
The margin will be sustainable, yes.
[Operator Instructions] The next question is from the line of Mr. Vignesh [indiscernible] from Sequent Investments.
Sir, can you explain as the store economics when it come to how much it cost you to set up new stores and what is usually your average size of the store, et cetera?
So the size of the store is within 2,000 to 2,500 square feet. And the CapEx cost, which is demonstrated in a particular store is somewhere between 7,000 to 10,000, around approximately INR 10,000 per square feet is the investment goes into a store, so somewhere between INR 2 crores, 2.5 crores goes into the CapEx.
Now it depends on the location, the inventory also been kept as 50 to 60 [indiscernible] and we -- similarly, we keep diamond also around 2,000 carat.
Sorry, I think in last one, diamond also?
So Diamond is approximately 2,000 carats or 3,000 carats.
Okay. And what is the payback period for these stores?
So payback period in what sense? In CapEx, you are talking?
In CapEx. If you could give both CapEx and CapEx we didn't know.
So from a store perspective, we see inventory call, which is gold is around 2%, 2.5% somewhere, and diamond is around 1.5%. That's inventory call. And from a CapEx payback period, we can keep around 2 to 3 years.
Okay. All right. Also, I mean, let's say a normal year, I mean, this year, we have [indiscernible] to Q3. I mean, if I say I take a normal year, how -- what would be the proportion of the revenue that you would see in H1 compared to H2? I mean, if you [indiscernible]
See, it will be, I can say, 60 or 40-60 H1 to H2. Normally, in our diamond jewelry -- sorry, jewelry retail, [indiscernible] falls into the first half, whereas Diwali Lanteus falls into the second half. Of course, there is a waiting there are other occasions. These are the 2 major occasions, but the -- there is a festive season, then there are other functions like [indiscernible] in Mumbai we celebrated at a large scale. [indiscernible].There are different occasions festive in India, India is filled with festives.
Sorry, sorry. Please, continue.
Is also the festive sometimes falls into half part of into the quarter 2 also sometime. Like last year, some portion of the festive was fallen in quarter 2. So like [indiscernible] started right from 24th of September. Whereas this year, it got shifted into quarter 3. So from a calendar quarter perspective, when you see the numbers, the numbers a little bit [indiscernible] from a growth perspective is a little [indiscernible]. But from a [indiscernible] festive, we normally -- for the business planning festive, it is always calculated on festive.
Understood. So if I have to take a financial year in perspective, if I heard it right in a normalized year, you will have around 55% or 60% in Q2 and 40%, 45% in Q1, right, in a financial year?
H1 to H2. So your question was for the first half to second half. Normally, second half is a little bit more than the first half because second half also will have apart from the festivity and all those things also there, but not much there. Maybe we can say 60 -- 40-60 H1 to H2 or maybe 45-55.
Right. So -- but this year around, we have seen the festivals push to Q2, so it could be better that the ratio would be more skewed towards Q2, right?
Absolutely. Absolutely. You're right.
[Operator Instructions] The next question is from the line of Narendra from Robo Capital.
So I wanted to know about your franchise stores that you are targeting? Anything in there like...
Sorry to interrupt. If you are a speaker, can I request you to use handset, please?
Yes. Okay. Am I audible now?
No, you are not clearly audible.
Is it clear now?
Yes, it's better now.
So I was asking you about your franchise store growth. Are you planning anything, say, in the half of the next year?
Yes, yes. We do have plan to open a couple of stores through the franchise route. We already had 3 franchise working with us for quite some time. We do have a plan to open a couple of stores through franchise.
Because if I'm not wrong, in the last call, you had said that post-Diwali will be looking at something. So do you have something?
Yes.
So 4 stores you are seeing, right?
So yes, we are trying to open a little more, but 2 to 3 will definitely open.
Okay. Okay. So this year or next year?
This year, second half.
Okay, okay. And your own stores, how many?
We have already opened 1 store, our own store in Vapi on 2nd of November. We are planning 1 more store, but it's not yet concrete.
Okay. Okay. Got it. And sorry, I missed your revenue and margin guidance. Could you repeat that?
So see, revenue is not exactly comparable in quarter 2 to quarter 2 last year to this year. But from an exact hardcore number, we had a revenue of INR 40.6 crores in quarter 2 FY '24 as compared to last year INR 536 crores. On half year numbers, we have a revenue of INR 1,051 crores in H1 FY '24 as compared to INR 1,166 crores -- INR 1,116 crores, H1 FY '23.
No, I was asking about the future guidance on revenue and margin plan.
That is something to the market. I can't reveal that. I mean it's only be a getting work. We will be definitely trying to surpass the numbers what we have already assumed.
Okay. And regarding margins, do we see any further expansion in the margins?
Margin, what you are seeing is already has increased quite a lot. If you've gone through the investor presentation, the margin has increased quite a lot. It is almost increased by 235 basis points in quarter 2 FY '24 compared to same period last year. And it has increased 292 basis points in H1 FY '24 under good [indiscernible] last year.
In terms of the percentage of gross margin, it stands at 13.3% in quarter 2 FY '24 as compared to 10.96% same period last year. And H1 FY '24, our gross margin, we have achieved is around 13.6% compared -- in H1 FY '24 compared to H1 FY '23 last year was 10.7%.
So is there any project to increase the margin? Or is it to say that this would be the steady state?
We foresee that we will be able to maintain this level. Obviously, we are trying hard to increase this percentage as well.
[Operator Instructions] The next question is from the line of Vidhi Shah from AMBIT Capital.
So on the revenue side, when we look at larger national players or even regional players, we sort of posted 20% to 30% Y-o-Y growth for 2Q. So besides the shift in festive season, which other factors has led to the decline [indiscernible] seen this quarter, the past quarter?
See, I can't comment on the competition because they have a lot of inorganic sale as well, okay? So there are lots of stores which might have operated for the same period last year, which might have operated during the mid of same period last year in the mid of season.
And as well as the new store which is opened this year, which was we didn't have this last year. So we may be able to see a different number of growth numbers. in the competition. In our case, these are the pure like-to-like numbers.
So we had operated 29 stores, same period of [indiscernible]. And this year also 29 owned stores and 3 franchise stores, so 32 stores for the same period. So our numbers are pure like-to-like, whereas competition, I'm not sure. From a festive perspective, the difference is not that much. Last year, the Navratra had started from 24th of September, if I'm not wrong, 24th or 25th September. This year, whereas it is shifted in the quarter 3. So those are the difference in quarter 2, we can see.
The next question is from the line of Mr. Sonal Jain, who's an Individual Investor.
Hello, everyone. I joined back. I just had another question. How does Tribhovandas plan to maintain its relevance and competitiveness in the jewelry industry, especially with the increasing competition from online and offline retailers?
Sonal, we do not compete with our online retailers. We believe the jewelry segment largely depends on touch and feel. And we are not in that segment what the online retailers might be catering for. TBZ, we see the competition is always going to be better. We adjusted for all the years. So you can see this is a 158 year-old brand in Indian it industry, which has been standing and delivering.
So we foresee that we'll be doing much, much better than going forward than what you are seeing where you are investor seeing the margin numbers and the PAT numbers is being improved quite a lot. So that will all reflect into the future performance of the company as well.
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Mukesh Sharma for closing comments.
Thank you all for participating in today's call. For any further queries, please reach out to the [indiscernible] or connect to us directly. Wishing you all a wonderful day ahead. [indiscernible] And with this, we'll conclude our call. Thank you very much.
Thank you. On behalf of Tribhovandas Bhimji Zaveri Limited, that concludes this conference. Thank you for joining us. Then you may now disconnect your lines.