Thangamayil Jewellery shares surge 7% following HDFC securities’ positive outlook on operations 

Formalisation, accelerated store expansion, competitively priced products, and access to capital at attractive rates attributed for the impressive uptick 

 Mumbai: Thangamayil Jewellery saw its share price surge nearly 7% on September 2, following a bullish new rating from HDFC Securities. The brokerage-initiated coverage on the stock with a “buy” rating and set a target price of Rs 2500 per share, up from its current market price. 

HDFC Securities forecasts robust growth for Thangamayil Jewellery, predicting a revenue compound annual growth rate (CAGR) of 26%. The brokerage attributes this anticipated growth to several factors, including the benefits of formalisation, accelerated store expansion, competitively priced products, and access to capital at attractive rates. 

In a recent note, HDFC Securities described Thangamayil Jewellery as “the D-Mart of Tamil Nadu’s jewellery retail sector,” highlighting the company’s efficient model of “high inventory turns and reasonable margins.” This approach contrasts with other listed jewellers who focus on “high operating margins and low inventory turns.” 

The brokerage also predicts a significant rerating for TJL, as the company’s return on equity (ROE) is expected to rise from 18% in FY23 to 32% in FY27, outperforming the industry leader, Titan. 

Additionally, HDFC Securities anticipates that Thangamayil Jewellery will open 30 large-format stores between FY25 and FY27, nearly doubling its existing store area. The brokerage forecasts a 26% sales CAGR over FY24-27, driven by strong external and internal factors. Historically, the company has been conservative in its expansion, adding only 19 stores from FY14 to FY24. 

The formalisation of the jewellery industry has gained momentum since hallmarking regulations were introduced in June 2021. Furthermore, a recent reduction in import duties from 15% to 6% as per the Union Budget in July 2024 is expected to benefit the sector further. 

Organised jewellers like Thangamayil are well-positioned to capture a greater market share in Tamil Nadu, as customers shift from traditional small-scale jewellers to more value-focused retailers. The latter’s superior customer experience, broader product ranges, lower making charges, and access to affordable finance—evidenced by a drop in average borrowing costs from 6.7% in FY20 to 4.8% in FY24 — are anticipated to drive this transition. 

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