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Kalyan Jeweller’s India Limited

Kalyan Jeweller’s India Limited IPO

Kalyan Jewellers is one of the largest jewellery companies in India based on revenue as of March 31, 2020. It started its jewellery business in 1993 with a single showroom in Thrissur, Kerala.

The key business activities of the company are to design, manufacture, and sell a variety of gold, studded and other jewellery products for various occasions i.e. wedding, festivals, etc.

Initially, the company was started with a single showroom in Kerala, and over the years, it has expanded its presence with 107 showrooms located across 21 states and union territories in India.

It not just serves the domestic market but also serves overseas customers with 30 showrooms located in the Middle East. The company generates a significant portion of revenues from gold jewellery, accounted for 74.77% in fiscal 2020 followed by studded (diamond and precious stone) and other jewellery segments.

Kalyan Jewellers designs manufacture and sells a wide range of gold, studded and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, which is its highest-selling product category, to daily-wear jewellery.

Product Portfolio:

The company design, manufacture and sell a wide range of jewellery products at varying price points for uses ranging from jewellery for special occasions such as weddings, which is our highest sold product category, to daily-wear jewellery.

Product category:

  • gold jewellery,
  • studded jewellery (including diamond) and
  • other jewellery (including platinum jewellery and silver jewellery)

Strength of the company

  • One of India’s largest jewellery companies.
  • Trusted Jewelry brand.
  • Strong network distribution with global outreach.
  • Wide range of jewellery product offerings.
  • Experienced promoters and managers.

RISKS RELATING TO BUSINESS:

  • Changes or a downturn in economic conditions may affect consumer spending, including on a company’s products.
  • The company may be unable to expand our product offerings and distribution channels
  • The company’s income and sales are subject to seasonal fluctuations which may have a disproportionate effect on the results of operations.
  • Company’s business depends on Promoters and senior management and their ability to attract and retain sales personnel

IPO Details:

IPO Date March 16th, 2021 to March 18th, 2021
Issue Type Book Built Issue IPO
Issue Size 135057471 Eq Shares of ₹10
(aggregating up to ₹1,175.00 Cr)
Fresh Issue 91954023 Eq Shares of ₹10
(aggregating up to ₹800.00 Cr)
Offer for Sale 43103448 Eq Shares of ₹10
(aggregating up to ₹375.00 Cr)
Face Value Rs.10 per equity share
IPO Price Rs.86 to Rs.87 equity share
Min Order Quantity 172
Listing At BSE, NSE

IPO Objective:

The company purposes to utilize funds towards the following objectives:

  • To finance business working capital requirements.
  • To meet general corporate purposes.

Financial Performance:

Kalyan Jewellers’ financial performance (in INR crore)
FY2018 FY2019 FY2020 9M FY2021
Revenue 10,580.2 9,814.0 10,181.0 5,549.8
Expenses 10,366.4 9,793.1 9,960.1 5,608.9
Net income 140.9 -4.8 142.2 -79.9
Margin (%) 1.3 0.0 1.4 -1.4

Tentative Time Table:

IPO Opens on 16 March 2021

IPO Closes on 18 March 2021

Basis of Allotment Date: Mar 24, 2021

Initiation of Refunds: Mar 2021

The credit of Shares to Demat Account: Mar 2021

IPO Listing Date: Mar 26, 2021

Outlook :

Kalyan Jeweller is one of India’s largest jewellery companies with a pan India presence. The hyperlocal strategy enables the company to cater to a wide range of geographies and customer segments.

In Fiscal 2020, 78.19% of its revenue was from India and 21.81% was from the Middle East. Over the same period, 74.77% of its revenue from operations was from the sale of gold jewellery, 23.36% was from the sale of studded jewellery (which includes diamonds and precious stones), and 1.87% was from the sale of other jewellery.

In fact, in Fiscal 2019, the revenue earned fell by over 9%. This was attributed due to an experimental strategy that the company adopted in that year. The questionable strategy was withdrawn after that year, and the revenue again increased by 3.58%. As the revenue from operations declined in FY 2019, this is also reflected by the net profit earned by the profit.

Another factor that can contribute to the dismal performance in FY 2019 is the severe floods that hit the southern part of India during this time. Owing to this, the demand for gold jewellery was affected.

The total assets owned by the company has shown a CAGR of 5.02% between 2017 and 2020. One positive fact to note here is that the long-term debt of Kalyan Jewellers has shown a consistent decline over the years.

As for India, expenditure on jewellery is one of the top constituents of retail consumption. In 2020, the amount spent on jewellery amounted to Rs. 449 thousand crores. This is expected to grow to Rs. 633 thousand crores by 2025 which will surely benefit the company in a long run.

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