Kalyan Jewellers IPO Detailed Analysis

Kalyan Jewellers IPO                                  

Kalyan Jewellers gets SEBI approval for ₹ 1,175 crore IPO. The IPO issue opens on March 16, 2021, and closes on March 18, 2021. 

Company Overview

Kalyan Jewellers, a leading jewellery retailer, was founded by T.S Kalyanaraman in 1993 in Thrissur, Kerala. Started with a single showroom, today, Kalyan Jewellers spread across all major cities in the country and overseas in these 27 years. At the end of Jun 2020, the company has 107 showrooms across 21 states, and union territories and 30 showrooms in the Gulf Cooperation Council (GCC) spread across UAE, Qatar, Kuwait, and Oman and will soon be expanding into new markets across India, GCC, USA, Singapore, Malaysia, Sri Lanka and more. It had 77 showrooms in 2015, and it grew significantly in these 5 years, adding 60 more showrooms.

Kalyan Jewellers has an online store www.candere.com through which it sells its products and has more than 750 ‘My Kalyan stores’ in India, which function as customer touchpoints and feeders to the showrooms. Kalyan jewellers offer various traditional and contemporary jewellery designs in gold, diamonds, precious stones, and other precious metals.

The IPO by a jewellery company comes nearly after 8 years, as the last ₹ 600 crore PC Jewellers IPO opened in Dec 2012.

Objects of the Issue

The issue will provide a partial exit to Warburg Pincus.

The net proceeds from the fresh issue of shares will be utilized for working capital requirements, store expansion, debt reduction, and general corporate purposes.

Promoter holdings

Promoters currently hold a 76% stake in the company while the rest 24 % held by Highdell Investment Ltd, a Warburg Pincus firm. Warburg Pincus is a global Private equity investor managing more than 62 billion dollars of assets. It had collectively invested Rs 1700 crore in Kalyan jewellers in two tranches. The first investment was Rs 1200 crore in 2014, which was the biggest private equity investment ever in the jewellery sector, and the other was Rs 500 crore in 2017. It has also invested in Lemon Tree Hotels and IDFC First Bank Ltd.

The IPO comes with a fresh issue of ₹ 1000 crore and an offer for sale of ₹ 750 crores. Kalyan Jewellers will be offloading shares worth up to ₹ 250 crores while private equity firm Warburg Pincus would sell up to ₹ 500 crore worth of shares through the OFS route.

Financials

The company reported a revenue of ₹ 10,100 crores in FY20, a jump of 3.3% over FY19, out of which 78% was from India, and 22% was from the Middle East. It has posted a net profit of ₹ 145 crores in FY20, a jump of 48% over FY19. The company has a debt repayment obligation of ₹ 80 crores each in FY20 and FY21.

Key positives

If we look at the domestic jewellery environment, all the players are slowly recovering after being hit badly by COVID-19. That’s when the footfalls and the sales were hurt. All the players are now showing signs of gradual recovery. Therefore, going ahead, the festival season and the wedding season will be significant as far as a complete proper revival in the jewellery segment is concerned. Kalyan jewellers management is very optimistic. They recently shared with the media that 80% of their showrooms are currently operational and witness normalcy as far as footfalls are concerned. Their sales have picked up after being badly hit by the pandemic and are almost close to the same-store performance of this time last year.

Comparison with peers

If we compare Kalyan Jewellers with its listed peer Titan company ltd., it has rallied very sharply since Mar 2020. It will give a tough competition as its financials are better than Kalyan Jewellers.  

The company management also expects the negative impact of the COVID-19 pandemic to be disproportionately higher for some of its competitors, particularly the smaller jewellers and those operating in the unorganized market.

It also expects the COVID-19 pandemic impact to accelerate further the shift of the jewellery market from unorganized players to organized players like them, given the conviction consumers are likely to have in the store experience and safety protocols businesses like they offer.

Issue Details

Kalyan Jewellers IPO Details

 Kalyan Jewellers IPO Lot Size and Price (Retail)

Also Read: IPO Historical Data