IPO listed on 3 Oct'23
Manoj Vaibhav Gems 'N' Jewellers Ltd
Minimum Investment
₹ 14,835 / 69 shares
Grey market premium
₹ 0
Issue price
₹ 215
Listing price
₹ 215
Our Verdict:
Neutral
- The company has demonstrated steady growth in both revenue and earnings, along with impressive return ratios. Additionally, when looking at its valuation, the IPO appears to be reasonably priced with a post-issue PE ratio of 14x. This is notably less than its counterparts in the market.
- On the other hand, a significant point to consider is that approximately 62% of its total revenue is derived from just one store. This, along with the risks listed below, is a substantial concern. Hence, it would be prudent for potential investors to closely watch the company's capital expenditure strategies and its financial outcomes in the upcoming two quarters before making an investment commitment.
About the company
Founded in
11 Jun'03
Managing director
Bharata Mallika Ratna Kumari Grandh
- Manoj Vaibhav Gems 'N' Jewellers Ltd, commonly known as Vaibhav Jewellers, is a prominent jewellery brand in South India. They provide a range of gold, silver, and diamond jewellery, along with precious gemstones, available both in their retail outlets and online.
- The brand has a footprint in 8 towns and 2 cities across Andhra Pradesh and Telangana, comprising 13 stores, of which 2 are operated by franchisees. In FY23, it held ~4% of the combined Andhra Pradesh and Telangana jewellery market share and ~10% of the organized market in these states.
STRENGTHS
- Consistent Performance: From FY21-23, Vaibhav Jewellers reported a notable revenue growth with a CAGR of 19%, accompanied by a 43% increase in EBITDA and a striking 86% rise in Net Profit.
- Enhanced Margins: Between FY21-23, the EBITDA Margin grew from 4.85% to 7.06%, and the Net Profit Margin more than doubled, reaching 3.5% from its previous 1.5%. While these margins might seem modest, they stand higher than many of the company's competitors.
- Strong Return Metrics: For FY23, the company registered a solid 23% Return on Equity and an 18% Return on Capital Employed.
RISK FACTORS
- Concentration Risk: Vaibhav Jewellers operates exclusively in Andhra Pradesh and Telangana. Its projected expansion is also limited to these regions. Economic fluctuations, shifts in population dynamics, increased competition, sociopolitical instability, or natural disasters in these states could negatively impact their performance.
- Working Capital Requirements: The business needs significant working capital, mainly for inventory and growth. As of August 15, 2023, they had sanctioned loans of Rs 3610 million, with an outstanding amount of Rs 3329.18 million due on demand. Failing to secure timely funding or meet financial obligations could harm our financial health and performance.
Issue details
Issue type
Mainstream
Issue size
₹ 270.2 crore
Fresh Issue
₹ 210 crore
OFS
₹ 60.20 crore
Price range
₹ 204 - 215
Lot size
69 shares
Issue Objective
Net proceeds from the fresh issue will be utilised towards:
- Financing the cost and inventory for setting up 8 new showrooms; and
- General corporate purposes.
Dates
Bidding open
22 Sep'23
Bidding close
26 Sep'23
Allotment date
28 Sep'23
Refund date
29 Sep'23
Listing
3 Oct'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
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