IPOs are attractive options for investors who want to invest in the long term growth of a business. Does Kalyan Jewellers IPO, which hit the market today, qualify as a good option? Let’s take an in-depth look at the offer made by Kalyan Jewellers.
Before we analyse the offer, here are the critical details that interested investors should know.
- The total offer size of Rs 1,175 crores includes fresh scrips worth Rs 800 crores and an offer for sale or OFS shares of Rs 375 crores
- The company has already raised Rs 352 crores through the anchor investor’s route, which took place on March 15, 2021
- Among 15 anchor investors were two marquee investors, the Monetary Authority of Singapore and the government of Singapore, received 5.11 and 29 percent respectively of the anchor investor quota
- Around half of the issue size is allotted for qualified institutional investors. retail investors received 35 percent, and 15 percent went to non-institutional investors
- At the price of 87, the IPO shares are 0.9 times of FY20 market capital/sales, and 63 times of its FY20 EPS
- Ahead of the offer, the grey market price reached Rs 93-95, which is an 8 percent premium
- The bidding window opened on March 16 for two days. Finalisation of share allocation will occur on March 23, 2021. And the share will debut in the market on March 26, 2021
Undoubtedly, Kalyan Jewellers IPO will attract many investors. The company is a leading jewellery brand engaged in designing, manufacturing, and selling gold and studded jewellery. As of December 2020, it had 107 showrooms in 21 states and 30 showrooms in the Middle East.
Kalyan Jewellers has listed peers like Titan and PC Chandra Jewellers.
- The issuer is one of the largest players in the organised jewellery segment
- A well-diversified product portfolio and supply chain
- Strong brand value with pan India presence and showrooms in the Middle East
- Multi-channel business model, combining brick and mortar showrooms and online store: candere.com
- The company operates on a hyperlocal strategy which enabled it to widen its customer base
- In the past few years, Kalyan Jewellers has expanded rapidly to capture a wider market
Between Fy18-20 company’s revenue growth remained flat, with sales declining slightly by 4 percent to Rs 10,101 crores, which might concern interested investors. However, The IPO is priced attractively against the Titan group, which is the largest player in the sector. Also, looking at the prospect, most market experts suggested investors subscribe for the long-term. Kalyan Jewellers is available at a one-year forward estimate of 25 times PE, calculated based on FY23 EPS.
“Given forecast improvement in profitability and balance sheet, India’s appetite for gold, strong pan India presence, brand recall and diversified product offering, we assign a ‘subscribe’ rating on a long-term basis,” prescribed Geojit Financial Services in its report.