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Kalyan Jewellers Company Details
Kalyan Jewellers is one of the largest jewellery companies in India based on revenue as of March 31, 2020, according to the Technopak Report. KJ started its jewellery business in 1993 with a single showroom in Thrissur, Kerala. & since expanded to become a pan-India jewellery company, with 107 showrooms located across 21 states and union territories in India, and also have an international presence with 30 showrooms located in the Middle East as of December 31, 2020. Important aspect is all of its showrooms are operated and managed by it.
Its total showrooms have increased from 77 as of March 31, 2015 to 137 showrooms as of December 31, 2020, and it intends to continue to open additional showrooms as it expects significant opportunity for further penetration in its existing markets as well as in new markets, primarily in India.
Another significant aspect is that KJ also sells jewellery through its online platform at www.candere.com ( which can be very valuable at later date)
The company design, manufacture and sell 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 our highest-selling product category, to daily-wear jewellery. In Fiscal 2020 and in the nine months ended December 31, 2020, 74.77% and 75.88%, respectively, of its revenue from operations was from the sale of gold jewellery.
Another important aspect is Hyperlocal Jewellery: The company’s endeavour to cater to its customers’ unique preferences, which often vary significantly by geography and micro market, through its local market expertise and region-specific marketing strategy and advertising campaigns. It engages local artisans to manufacture jewellery (based on our specifications) that is suited to local tastes in the markets in which it operates and hence endeavour to curate a localised product mix and store experience within each of its showrooms to suit its customers’ preferences in the immediate micro market. Its ability to operate as a hyperlocal jewellery company, that has enabled us to become one of only the few pan-India jewellery companies.
Trusted Jewellery Brand: According to the Technopak Report, it is one of the first jewellery companies in India to voluntarily have all of its jewellery BIS hallmarked as well as accompanied by a detailed pricing tag disaggregating the various components of price to aid transparency to consumers. KJ was awarded the Superbrands title of being ‘India’s most preferred jewellery brand in Fiscal 2020.
Through unique marketing strategies Kalyan endeavours to connect and engage with over 10 million potential customers each year through its “My Kalyan” network.
Information Technology: It has built robust information technology and operational management systems which are specific to its business needs to ensure best-in-class standards of controls and operational efficiency., inventory management and the mitigation of gold price fluctuations as critical to the success of its business
Another important aspect is its shareholders which include Highdell, belonging to the Warburg Pincus group.
Kalyan Jewellers IPO Main Objects
The Offer comprises a Fresh Issue by the Company and an Offer for Sale by the Selling Shareholders.
The Net Proceeds from the Fresh Issue are proposed to be utilized towards Funding working capital requirements of the Company
Kalyan Jewellers IPO Details
Kalyan Jewellers IPO Opens on : 16 March 2021
Kalyan Jewellers IPO Closes on : 18 March 2021
Issue Size Rs. 1175 Crore
Fresh Issue : Rs. 800 crore
Offer for Sale : Rs. 375 crore
Face Value per share : Rs. 10
Kalyan Jewellers IPO Price Band Per Equity Share: Rs. 86-87
Kalyan Jewellers IPO Lot Size 172 Shares
Shares offered to
QIB (50%) 67402154 Shares = Rs 586.40Crs
NII (15%) 20220646 Shares = Rs 175.92 Crs
RII (35%) 47181507Shares = Rs.410.48 Crs
Lot size: 172 Shares = 274311 Forms)
Now lets discuss financial angle
There are two arguments against this IPO
1) The company is making losses &
2 ) It has very huge loan burden.
Lets check, is there any truth in the same
Yes the company has incurred loss of Rs. 4.86 crores during the year 2018-19. And also during the 9 months of the current year. Loss of the current year is clearly attributable to Covid pandemic. However we must know that the company had earned net profit after tax of Rs. 140.99 cr in the year 2017-18 and of Rrs. 142.25 cr in the year 201920 that too after huge deduction of depreciation and amortisation. The company is fast expanding its retail network since last 5 years and naturally, the depreciation & amortisation is bound to be very high.and yet the company has earned profits.
Another argument is huge liability burden. The company has liability of Rs. 5376 crores which includes Bank loans and also payables to the suppliers eg current liabilities. and yet total liability is less than its current assets of Rs. 6031 crore . So the arguments are not tenable.
Another fear is large number of defaults seen among jewellary sector companies. Here We have to look at its shareholders which include Highdell, belonging to the Warburg Pincus group.
So looking to strong brand, its retail presence across the country and fast growth of Organised Jewellary sector, I believe that one may apply in this IPO with long term angle
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