Incorporated in 1993 by founder T S Kalyanaraman, Kalyan Jewellers India designs, manufactures 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 (the highest-selling product category) to daily-wear jewellery. The Kalyan Jewellers IPO opens for subscription on March 16th and closes on March 18th. The price band for the issue is ₹86-87 per share. The IPO size is a massive ₹1,175 crores.
At the upper end of the price band, the stock is available at 0.9 times the FY20 market cap/sales, and 63 times FY20 EPS. This is cheaper as compared to the likes of Titan, that trade at 186.74 times earnings.
Grey Market Premium
In the grey market, the shares are trading in the range of ₹93-95 per share. This translates to a modest premium of 8%.
“Risk concerns weigh more over rationales to invest in this IPO, hence we recommend risky investors can ‘subscribe with caution’. We see high competition from both organised and unorganised players in the Indian jewellery industry as the majority of the jewellery industry consists of unorganised players who have historically dominated a large part of the market, although their share of the market has been falling and is expected to continue to decline,” the Mehta Equities.
The brokerage goes on to state “On valuations parsed at upper price band (Rs 87), the issue is asking for a market cap of Rs 8,961 crore, due to incurred losses in FY19. Even for a period of nine months ending December 2020, we cannot annualise last 9 months EPS to valuate on annualised price-earnings ratio. And we believe the ask valuations indicate this IPO offer is fully priced on industry average, so conservative investors can give a miss on this offer”
The long term investor can subscribe to this issue. Those looking for listing gains can avoid this IPO. They can look at one of the other IPOs hitting the market this week.
You can apply for the IPO here.