Tribhovandas Bhimji Zaveri soars to record high on growth optimism after GRT Jewellers deal

Tribhovandas Bhimji Zaveri's shares reached a record high on Tuesday following GRT Jewellers' agreement to acquire a controlling stake in the jewellery retailer, driven by investors' optimism about the deal's potential to enhance TBZ's growth prospects. The company's shares jumped nearly 20% to a record 366.80 rupees, reaching their maximum allowed price for the day.

In the acquisition, GRT Jewellers, a leading jewellery retailer in southern India, will obtain a 74.12% stake from TBZ's top shareholders for 10.34 billion rupees ($109.03 million), or 209 rupees per share, which is a 31.6% discount to the stock's closing price on Monday. GRT will also launch an open offer for the remaining 26% stake.

Analysts believe that the merger of GRT Jewellers and TBZ would strengthen the combined entity's market position and bolster its regional brand image. With GRT's presence in 68 stores across India and one in Singapore, alongside TBZ's established footprint in western India, the united business could expand its reach in both markets, as noted by Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.

The acquisition is particularly advantageous as both jewelry chains compete for market share in a fragmented industry. As competitors vie for a growing market, jewellery retailers have witnessed robust revenue growth due to high gold prices, which have fueled sales, and a growing trend among consumers to favor branded chains.

By late morning on Tuesday, over 12 million TBZ shares had changed hands, accounting for approximately 6.5 times the stock's 30-day daily average, indicating a significant surge in trading activity.