TBZ Shares Skyrocket Post-Acquisition News
Shares of Tribhovandas Bhimji Zaveri (TBZ) have witnessed a dramatic rally, climbing 72.18% over six consecutive trading sessions to hit a one-year high of Rs 519.75 on Monday. This significant market movement comes after GRT Jewellers India announced on August 31 its agreement to acquire a controlling 74.12% stake in the jewellery retailer.
The acquisition, valued at an aggregate consideration of up to Rs 1,033.71 crore, involves GRT Jewellers purchasing the promoters' stake at Rs 209 per share. The transaction is contingent upon regulatory approvals and standard closing conditions. Additionally, GRT Jewellers plans to launch an open offer for an extra 26% stake in TBZ, priced at Rs 249.61 per share, in compliance with Securities and Exchange Board of India (Sebi) regulations.
Why the Market is Reacting Positively
Market analysts attribute the sharp increase in TBZ shares to the strategic acquisition. Kranthi Bathini, an equity strategist at WealthMills Securities, highlighted the positive implications of the deal, suggesting it could significantly aid TBZ in expanding its presence, particularly in southern India. Bathini recommended existing investors hold their positions and advised fresh buying on market dips for a long-term investment perspective. He also noted that recent corrections in gold prices have marginally improved affordability, coinciding with the upcoming festive and wedding seasons.
Ravi Singh, Chief Research Officer at Master Capital Services, echoed this sentiment, stating that the rally reflects expectations of a potential strategic turnaround under GRT's ownership. Singh pointed to TBZ's improved operating performance in FY26, which saw revenue reach Rs 3,203 crore, EBITDA at Rs 369 crore with margins improving to 12%, and profit after tax (PAT) hitting Rs 202 crore. However, he also cautioned about elevated borrowings of Rs 886 crore and finance costs of Rs 77 crore as ongoing concerns. Singh also noted that the stock is currently under ASM Stage 1 (Additional Surveillance Measure framework) after its rapid gains.
Understanding the Price Discrepancy
Investors might wonder why the acquisition price of Rs 209 per share for the promoter stake differs from the current market price. This discrepancy arises because the promoters are selling their substantial 74.12% stake to GRT Jewellers through a negotiated transaction, not an open-market sale. A negotiated deal allows the buyer and seller to agree on specific terms and pricing for a large block of shares without the volatility that selling such a large holding in the open market could cause, which might otherwise depress the stock price due to increased supply.