Thangamayil Jewellery

Investment Highlights

• Retail footprint: The company operates 59 showrooms across Tamil Nadu, with stores focused on tier II and tier III cities and a dominant position in Madurai.
• Store expansion: The report notes expected openings of 10-15 stores over the next 18 months and a recently inaugurated flagship store of 10,000 sq. ft.
• Potential margin improvement: The report cites a current studded-jewellery share of <9% and identifies a higher studded share and changes to making charges as potential margin drivers.

Key Risks

• Geographic concentration: All showrooms are located in Tamil Nadu.
• Working capital: The business requires varied designs to be displayed to customers and is described as working-capital intensive.
• Gold-price volatility: Profitability is exposed to gold-price volatility, although the report says inventory risk is hedged through gold metal loans, customer advances and financial derivatives.

Standard disclosures

• Research Analyst has served as an officer, director or employee of subject company(ies): No
• We or our associates have received compensation from the subject company(ies) in the past 12 months: No
• We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past12 months: No
• We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months –No
• We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report –No
• We or our associates or Research Analyst or his/her relative's financial interest in the subject company(ies)- No
• Nature of financial interest in subject company, if any –Nil
• We, our associates or Research Analyst have actual/beneficial ownership of 1% or more securities of the subject company (ies) at the end of the month immediately preceding the date of publication of Research Report – No
• Subject company (ies) may have been client during twelve months preceding the date of distribution of the research report-No.
• We or our Associates or Research Analyst are engaged in market making of subject company – No
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Regulatory disclosures

Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).

Registration granted by SEBI and certification from NISM in no way promise or guarantee that the research recommendation will provide any assured, minimum or risk-free return to the investors.

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Rating rationale

Minerva Capital Research Solutions endeavors to provide objective opinions and recommendations. Ratings are assigned to stocks according to their fair value vs current market price and then categorizes them as Buy, Hold, Reduce, Sell. The performance horizon is one year unless specified and fair value is defined as analyst’s valuation for a stock.

• Buy:> 15%
• Hold: -5% to 15%
• Reduce: -15% to -5%
• Sell: <-15%