Leading jewellery chain Kalyan Jewellers floats its IPO shares in the price range of Rs 86-87, which will let issuers rake up Rs 1,175 crores at the upper price limit. The bidding window for the IPO opens on March 16, 2021, for two days, until March 18, 2021. The majority of the market experts advised investors to subscribe to the offer, keeping the company’s fundamentals and future business prospects in mind. But should you? Before the issue opens, let’s consider all the critical aspects of it, which will help us decide the merit of the offer.
Key Factor Of Kalyan Jewellers IPO
- The issue size consists of fresh issues worth Rs 800 crores and the rest on offer for sale equities from the promoters and current investors.
- Promoter, TS Kalyanaraman will offload Rs 125 crores of OFS from his stash. Other investors will sell another Rs 250 crores of equities, taking the OFS amount to Rs 375 crores.
- The company plans to reserve Rs 2 crores worth of shares for its employees, whereas qualified institutional buyers receive a 50 percent reservation.
- The issuer expects retail participation of up to 35 percent. Retail investors need to apply for a minimum of 172 shares for Rs 14,964. They can increase their bidding size up to 13 lots.
- Important Kalyan Jewellers’ IPO dates are subscription opening date on March 16, 2021, and closing date on March 18, 2021. Bidding for anchor investors opened on March 15, 2021.
- Around 15 anchor investors invested Rs 352 crores.
- The company will utilise the proceed from the IPO activity to meet working capital requirements and general corporate expenses.
- Axis Capital, Citigroup Global Markets India, ICICI Securities and SBI Capital Markets are the lead managers for the offer.
- IPO allotment finalisation will occur on March 23, 2021. And the shares will list in the exchanges on March 26, 2021.
Analysis Of Kalyan Jewellers’ IPO
At the price band, Kalyan Jewellers IPO is on the upper side. At the price of 87, the stocks are valued 0.9 times of its market cap/sales and 63 times their EPS in FY20. Most experts said that the shares are richly valued but suggested investors subscribe for long-term.
Company Background And Financials
Founded in 1993, Kalyan Jewellers is a PAN India jewellery brand with showrooms across Indian cities and the Gulfs. The brand had a presence in 21 Indian states with 107 showrooms and 30 showrooms in the Middle East in December 2020.
On the financial front, the company reported a profit of Rs 142.27 crores in March 2020 and against a loss of Rs 4.86 crores during the previous financial year. Hence, the company had performed really well in FY20, clocking a revenue growth of 3.4 percent year-on-year to Rs 10,100.9 crore. Its Indian jewellery business contributed 78.19 percent in the company’s revenue, while exports accounted for 21.81 percent during FY20. For the nine months of FY21 till December, the domestic jewellery business contributed 86.21 percent and exports, 13.79 percent.
Slightly on the upper side, the IPO share price may remain a concern for investors. But compared to Titan, which is currently valued at 186.74 times earning, Kalyan Jewellers’ shares are attractively priced. Secondly, the company experienced a sharp decline in revenue and profit during the nine months of FY21 till December, caused by the pandemic. However, Kalyan Jewellers has a strong brand value and will recover as the global economy strengthens. Its strong market presence in India and abroad is critical to its success in the long run.