In this Kalyan Jewellers IPO Review, we have tell you about the IPO launch date, News, Price Band, Lot Size, Business model, Financials and IPO details.
Kalyan Jewellers IPO Review
Hi, today another IPO is opening of Kalyan Jewelers and we will be discussing its details. The article will be divided into 6 parts, about the company, its financials, its industry, its pros, and cons and lastly we will talk about the important dates and numbers regarding this IPO.
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Kalyan Jewellers Company Overview
Let's talk about the company, Kalyan Jewelers is one of India's largest jewelry companies. The company makes 3 products, gold jewelry, studded jewelry and other types of jewelry products.
The company started out as one showroom in Kerala many years back and today the company is spread across 21 states and UT with 107 showrooms and it caters to international customers with 30 showrooms in the Middle East 78.19% of the total revenue comes from India and the rest from Middle East. The company caters to various types of customers on different price points.
Let's talk about the segment-wise revenue from operations, in FY20, 74.77% was from gold jewelry 23.36% from studded jewelry and 1.8% from other jewelry. If we see till Dec 31, 2020, 75.88% revenue from gold jewelry, 21.72% from studded and 2.4% from others.
Kalyan Jewellers financials
Let's now talk about their financials, they have seen a major negative impact of COVID because people are not buying jewelry that much and no grand-scale weddings are happening.
In FY20, the company made 142.28 Cr in profits but in these 9 months, the company faced a loss of 79.9 Cr. If we see the valuation, the PE of the company is 50.92 as compared to 23.12 of the industry. Its PB ratio is 3.52 and its market cap is 7245 Cr. The company's net profit margin is -1.44%, the operating profit margin is 4.14% and ROE is 6.91%. If we talk about its liquidity, its current ratio is 1.12% and the debt-equity ratio is 1.31%
Kalyan Jewellers Industry
Let's now talk about the industry under which this company operates, globally, 41% share is of plain gold jewelry, 41% of diamond-studded jewelry, 5% of plain platinum, 6% of palladium and 7% of others.
You can see how the Indian Jewelry market has expanded from 2007 to 2020 but a fall of 37% is expected in 2021 due to covid with a projection of 22% growth by 2025.
Now you can see the comparison of Kalyan Jewelers with its peers. PE ratio of Kalyan Jewelers is 50.9, TBZ at 13.96, Thangamayal jew at 10.31 and Titan at 174.2. PC Jewelers doesn't have a PE ratio because it is a loss-making company.
The operating profit margin of Kalyan Jewelers is 4.14%, TBZ at 9.37%, Thangamayal at 9.84. Titan at 8.03% and PC Jewelers at 10.81%. Debt to equity ratio is 1.31% followed by 1.12% of TBZ, 0.87% of Thangamayal and PC Jewelers and Titan at 0.55%.
Pros of Investing
Let's now talk about the pros of investing
First is the expected growth of the industry, reason being the independence due to which the share of working population is rising.
Second being the rising urbanization, there is a rise in expenditure in merchandise and its services.
The third is government bringing many policy reforms due to which agriculture is rising and rural share is rising Post covid, the demand is expected to rise as the wedding season resumes fully.
Other than this the company is a brand and has its presence all over India. Has a strong distribution network with a global outreach. It caters to different type of customers with various products, from wedding jewelry to daily wear jewelry
Cros of investing
Let's now talk about the cons to keep in mind before investing in this IPO.
The debt to equity ratio is 1.31% which is the highest in the industry. Its net profit margin and ROE was low even before covid and on the other hand its PE ratio is very high as compared to the industry. The company has many legal and civil cases against them with a liability of 449.62 Cr.
The major revenue comes from South India and any regional changes impact the company a lot. The company's business is cyclical and major sales are in the wedding season. and this company is a consumer discretionary company meaning if a recession comes, it would leave a huge negative impact.
Kalyan Jewellers IPO Date
Let's now talk about some important dates of this IPO, bidding date will be open from 16th to 18th March 2021. The tentative listing date is 26th March 2021 and this can be changed anytime by the company.
Kalyan Jewellers IPO Price
The price band is from Rs 86-87 per equity share And minimum shares for a lot to bid is 172 shares. The total IPO size is 1175 Cr in which fresh issue is of 800 Cr and Offer for sale is 375 Cr.
We make all article for educational purposes so that we can deliver the right information. You can further do your own research, invest for the long term and make good returns.
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