Thangamayil Jewellery - Entering A Golden Era; HDFC Securities Initiates Coverage With A 'Buy' Rating

HDFC Securities Institutional Equities

Entering a golden era; initiating coverage with a high-conviction Buy and a target price of Rs 2,500 (25 times September 2026 EPS, representing a 25% premium to its five-year one-year forward average PE).

We believe Thangamayil Jewellery Ltd., a leading jewellery player in Tamil Nadu, is set to achieve 26%, 33%, and 41% revenue, Ebitda, and profit after tax compound annual growth rate, respectively, over FY24-27.

This growth will be driven by the benefits of formalisation, accelerated store expansion, its value-for-money offerings, and the easy availability of capital at competitive interest rates.

We view Thangamayil Jewellery as the DMart of Tamil Nadu's jewellery retail sector, applying principles of "high inventory turns and reasonable margins," in contrast to other listed jewellery players who focus on "high operating margins and low inventory turns" to generate respectable return ratios.

We anticipate significant rerating, as Thangamayil Jewellery's ROE improves from 18% in FY23 to 32% in FY27, substantially surpassing that of Titan, the market leader in the organised jewellery space.

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