Shares of Tribhovandas Bhimji Zaveri (TBZ) extended their sharp rally on Wednesday, September 2, after surging 46.9% across three trading sessions, including today.
The stock climbed from Rs 292.70 on August 31 to Rs 430 during Wednesday's session, driven by strong buying after GRT Jewellers announced a takeover deal for the jewellery retailer.
Following the sharp price movement, the applicable price band for TBZ shares has been reduced to 10%, limiting the stock's daily movement and highlighting the exceptional volatility witnessed over the past two sessions.
The major rally began on Tuesday when TBZ shares jumped 20% and hit the upper circuit at around Rs 366.80.
Trading volumes also surged, with more than 12 million shares changing hands by late morning, around 6.5 times the 30 day average, according to Reuters.
GRT Jewellers Takeover Triggers Rally
The immediate trigger for the buying interest is GRT Jewellers' agreement to acquire a controlling stake in TBZ.
GRT has agreed to acquire 74.12% of TBZ from its promoter group for up to Rs 1,033.71 crore. The transaction covers 4,94,59,775 shares, with the acquisition price capped at Rs 209 per share.
The deal will also trigger a mandatory open offer for up to 25.88% of TBZ's voting share capital. GRT has set the open offer price at Rs 249.61 per share.
Despite both prices being substantially below the prevailing market price, investors have aggressively bought the stock.
Also Read: GRT Jewellers To Buy Controlling 74.12% Stake In Tribhovandas Bhimji Zaveri
Why Is TBZ Trading Above The Open Offer Price?
The sharp premium suggests that investors are looking beyond the immediate transaction prices.
GRT operates a large jewellery retail network, while TBZ brings an established brand and 37 stores. The 162-year-old TBZ brand also has a strong presence in western India.
The acquisition could therefore help GRT expand its pan-India footprint and combine its southern market strength with TBZ's established presence elsewhere.
Reuters noted that investors expect potential synergies and stronger growth from the combination.
What Investors Need To Watch?
The key focus now will be the completion of GRT's acquisition, regulatory approvals, and the mandatory open offer.
The biggest question is whether GRT can unlock enough operational and financial value to justify the much higher valuation investors are currently assigning to TBZ.
For now, the takeover has transformed TBZ into one of the market's biggest movers, with the stock trading well above both the Rs 209 acquisition price and Rs 249.61 open offer price.
Also Read: Jewellery Stocks Watch: Sky Gold, Senco, Kalyan Jewellers Fall Up To 3%; How Are Others Performing?
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