The issue, which will close on March 18, aims to raise Rs 1,175 crore through the IPO.
The initial public offering (IPO) of Kalyan Jewellers opened on Tuesday with a price band of Rs 86-87 per share. The issue, which will close on March 18, aims to raise Rs 1,175 crore through the IPO.
The jewellery showroom chain's IPO has been one of the most anticipated since December when it was expected to hit the market. However, the company has reduced its IPO size. Earlier, it intended to do a Rs 1,750-crore IPO.
The IPO comprises of issuance of fresh equity up to Rs 800 crore and an offer for sale (OFS) worth Rs 375 crore.
Here's all you need to know about the issue:
Opening Date: March 16, 2021
Closing Date: March 18, 2021
Price Band: The price band for the issue has been set at Rs 86-87 per share.
About the firm: The company was incorporated in 1993 and is one of the largest jewellery companies in India based on revenue as of March 31, 2020. Kalyan Jewellers has expanded to become a pan-India jewellery company, with 107 showrooms located across 21 states and union territories in India, and also has an international presence with 30 showrooms located in the Middle East as of December 31, 2020.
Size of the issue: The Rs 1,175-crore IPO consists of a fresh issue of Rs 800 crore and an offer for sale of Rs 375 crore by promoters and shareholders.
The OFS comprises selling shares worth up to Rs 125 crore by promoter TS Kalyanaraman, and Rs 250 crore by Warburg Pincus. Kalyanaraman and Warburg hold 24.5 percent and 32 percent stake in the company, respectively.
Reservation: Of the total issue, 50 percent will be reserved for qualified institutional buyers (QIBs), 35 percent for retail investors and 15 percent for non-institutional investors. Also, a special reservation of shares worth Rs 2 crore has been made for employees who will also get a discount of Rs 8 per share on the price band.
Minimum Bid: Investors can bid for a minimum of 172 equity shares and in multiples of 172 equity shares thereafter implying a minimum investment of Rs 14,964 at the higher end of the price band.
Objective: The proceeds from the offer for sale will go to the selling shareholders, while the amount received from the sale of fresh issue will
be utilized for funding working capital requirements of the company and general corporate purposes.
Book Runners: Axis Capital, Citigroup Global Markets India, ICICI Securities and SBI Capital Markets are the global co-ordinators and book running lead managers, while BOB Capital Markets is the book running lead manager to the issue.
Financials: The firm posted a profit of Rs 142.27 crore for FY20 against a loss of Rs 4.86 crore in the previous financial year, and a profit of Rs 141 crore in FY18. Revenue in FY20 grew by 3.4 percent (year-on-year) to Rs 10,100.9 crore. In the nine months period ended December 2020, the company posted a loss of Rs 79.95 crore against a profit of Rs 94.3 crore in the corresponding period. In the same period, revenue declined sharply by 30.7 percent to Rs 5,516.70 crore due to the COVID-19 impact.
Outlook: Analysts are bullish on the issue given the forecasted improvement in profitability and balance sheet, India’s appetite for gold, strong pan India presence, brand recall and diversified product offering.
"We believe Kalyan Jewellers would perform better on the back of a strong brand and number of stores in India and internationally. Thus, we recommend a subscribe rating on the issue," said Angel Broking.
• Rich valuation versus peers may bear on short term performance.
• Volatility in gold prices, seasonality of business and impact of government policies.
• High competition from both organized and unorganized players.