Thangamayil Jewellery Ltd – A Sparkling Opportunity in Regional Retail

CMP: ₹1,914

Market Cap: ~₹6,000 Cr
Sector: Retail – Jewellery
Coverage: Fundamental Analysis
View: Long-Term Positive Bias

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Company Overview

Thangamayil Jewellery Ltd (TMJL) is a prominent regional retail jeweller with deep roots in Tamil Nadu, India’s gold capital, accounting for 40% of the nation's gold consumption. With 58 stores across tier-II and tier-III towns, the company is firmly entrenched in the southern retail jewellery space.

TMJL’s offerings span gold, silver, diamonds, and platinum, with gold jewellery accounting for ~75% of its revenues. The company’s vertically integrated model, including four in-house manufacturing units, gives it control over design, quality, and costs.

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Business Strengths

1. Strong Regional Footprint

All of TMJL’s stores are located in Tamil Nadu, with dominant market positioning in cities like Madurai. Despite being regionally focused, its scale and penetration provide it with moat-like characteristics in its target market.

2. Efficient Manufacturing & Utilization

The in-house manufacturing facilities operate at ~75% utilization. This translates to improved economies of scale and lower per-unit production costs—a significant advantage in a margin-sensitive industry.

3. Effective Hedging Policy

TMJL hedged 89% of its gold inventory in FY24, up from 76% in FY23, substantially reducing exposure to gold price volatility—one of the key risks in jewellery retail.

4. Data-Driven Stock Management

With a gold ornament stock turnaround ratio of 3.52x in FY24, the company actively monitors slow/non-moving SKUs to maintain fresh and fast-selling inventories.

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Key Operating Metrics (FY24 Highlights)

Metric	Value
Revenue	₹3,827 Cr
Operating Margin (OPM)	6%
Gold Volume Sales	5,604 kg (up 10.6% YoY)
Diamond Volume Sales	15,013 carats (up 39% YoY)
Avg. Ticket Size	₹73,099
Same Store Sales Growth (SSSG)	23.49%
Revenue per Sq. Ft.	₹4,16,933
Per Employee Sales	₹1.81 Cr
Annual Invoices	8.1 lakh

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Financial Performance Snapshot

Annual Revenue Growth (₹ Cr):

• FY22: 2,193

• FY23: 3,153

• FY24: 3,827

• TTM (FY25E): 5,252

Operating Profit Margin:

• FY22: 4%

• FY23: 5%

• FY24: 6%

• TTM: 4%

Net Profit (₹ Cr):

• FY22: ₹39

• FY23: ₹80

• FY24: ₹123

• TTM: ₹108

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Quarterly Performance (Q1 FY25)

Metric	Q1 FY25	Q1 FY24	YoY Growth
Sales	₹1,558 Cr	₹1,222 Cr	+27.5%
Operating Profit	₹87 Cr	₹92 Cr	-5.4%
Net Profit	₹46 Cr	₹57 Cr	-19.3%
EPS	₹14.71	₹18.19	↓

Comment: Q1 FY25 saw solid topline growth but modest margin compression, possibly due to promotional activities and higher input volatility.

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Key Ratios & Metrics

• Inventory Days: 127 (moderate for jewellery retail)

• Cash Conversion Cycle: 125–162 days

• ROCE: 20% in FY24 (14% TTM)

• EPS TTM: ₹34.7

• Dividend Payout: ~22% of profits

• Debt-to-Equity: Moderate; borrowings have grown to fund expansion

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Expansion Plans & Strategic Goals

TMJL is doubling down on its "dominant regional player" strategy with the following FY25 goals:

• Opening 9 new stores (including a flagship in Chennai) with ₹40 Cr capex

• Boosting stock turnover from 3.52x to 3.75x

• Enhancing high-value mix (Diamond, Platinum) by 2–10%

• Growing the customer base by 10% over its current 3.25 million active base

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Valuation Check

• EPS (TTM): ₹34.7

• P/E (TTM): ~55x

• Market Cap/Sales (TTM): ~1.15x

• ROCE: 14–20%

• Debt-Equity: ~0.75x (manageable)

While the P/E is elevated, the premium could be attributed to:

• Consistent revenue growth

• Strong regional brand equity

• Efficient operations and hedging mechanisms

• A long runway for expansion in underpenetrated markets

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Shareholding Trends

Holder	Sep '22	Jun '24
Promoters	66.66%	61.28%
FIIs	0.17%	4.52%
DIIs	11.46%	12.77%
Public	21.71%	21.42%

Observation: FII and DII interest has been steadily rising, signaling growing institutional confidence.

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Risks to Watch

• Geographical Concentration: 100% revenue from Tamil Nadu

• Gold Price Volatility: Though well-hedged, sharp price moves still impact sentiment

• High Working Capital Cycle: Inventory-heavy model remains capital intensive

• Valuation: Stock appears richly valued; earnings growth needs to sustain

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Investment Thesis

Thangamayil Jewellery Ltd represents a regional retail success story—deeply focused, operationally sound, and strategically expanding. With improving profitability metrics, efficient working capital management, and an underpenetrated addressable market, the company is well-positioned to continue compounding over the long term.

Ideal For: Long-term investors seeking exposure to India’s gold retail growth story with a regional moat

Avoid If: You prefer large caps or diversified pan-India retailers, or are wary of rich valuations

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Final Word

TMJL is not just a jewellery company; it’s a play on Tamil Nadu’s gold obsession. If it continues to scale profitably while maintaining its balance sheet discipline, it could turn into a formidable regional force with national-level returns.

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Disclaimer: This is not investment advice. Please consult a financial advisor before making investment decisions.