IPO listed on 27 Dec'23
RBZ Jewellers Ltd
Minimum Investment
₹ 15,000 / 150 shares
Grey market premium
₹ 0
Issue price
₹ 100
Listing price
₹ 100
Listing gains
0%
Listing on
Dec 27, 2023
Our Verdict:
Avoid
- Despite the firm's impressive revenue and net earnings growth, it is important to consider the risks involved. These include dependence on a few key customers, the absence of formal agreements with in-house artisans, significant working capital requirements, negative operational cash flows, and considerable debt.
- From a valuation standpoint, the IPO appears to be reasonably priced at a PE multiple of 16.5x, based on the projected earnings for the fiscal year 2024. The grey market premium for the issue suggests a flat listing.
- Considering these factors, it would be prudent for investors to review the company's performance over the coming two quarters before making any investment commitments.
About the company
Founded in
15 Apr'08
Managing director
Rajendrakumar Zaveri
- RBZ is an esteemed manufacturer of gold jewellery in India, with a particular focus on creating antique bridal gold jewellery, featuring traditional designs like jadau, meena, and kundan. Alongside selling, the firm offers job work services for processing and supplying antique bridal gold jewellery to national retailers. Its wholesale business flourishes with a strong customer network that includes renowned national, regional, and local family jewellers.
- With a significant presence in the organized wholesale gold jewellery market, RBZ holds ~1% market share and boasts over fifteen years of experience in the jewellery sector. Additionally, the firm exports its exquisite jewellery to the Middle East.
STRENGTHS
- Solid Distribution Reach: RBZ has a wide reach and presence across India. With a customer base in 20 states and 72 cities, the company has established a strong foothold in the market and has a deep understanding of the local customer preferences and trends.
- Impressive track record: RBZ has shown impressive growth with a Compound Annual Growth Rate (CAGR) of 64% in revenue, 37% in EBITDA, and a significant 51% in net profit over FY21-23.
- Robust Returns: In FY23, the Return on Equity was at 27.49%, while the Return on Capital Employed was at 20.08%.
- Healthy Profit Margins: The EBITDA and Net Profit margin in Fiscal 2023 stood at 13.71% and 7.76%, surpassing many of its peers.
RISK FACTORS
- Revenue Concentration: A significant share of RBZ's income, 15.86% from its top 10 wholesale customers and 100% from its job-work segment, is concentrated among a few clients. Furthermore, the firm lacks long-term agreements with most of these key customers. Loss of business from any of these customers could negatively impact the company's financial stability and operational outcomes.
- Cash Flow Concerns: RBZ has reported negative cash flows from its operations for the six months ending September 2023, as well as for Fiscal 2023 and 2021. Persistent negative cash flows, or significant short-term deficits, could severely affect the firm’s operational capabilities and growth strategies.
- Significant Working Capital Needs: RBZ needs considerable working capital, mainly to buy raw materials such as gold, diamonds, stones, and silver. The firm’s secured credit obligations, personally guaranteed by the firm’s Promoter and the Promoter Group, totalled Rs 77.44 crore as of September, accounting for 76% of its total debt. There's no guarantee of continued financial support from these sources or finding alternative financing in the future.
- High Inventory Levels: RBZ's business operations remain working-capital intensive with gross current assets (GCA) of over 200 days for fiscal 2023. For efficient functioning, the company needs to keep a substantial inventory, which spans over 190 days.
- Delay in Statutory Payments: RBZ has previously delayed payments under various statutory laws, including the IT Act, Central Goods and Services Tax Act of 2017, Employees Provident Funds and Miscellaneous Provisions Act of 1952, and Employee State Insurance Act of 1948. These delays and non-compliances could lead to penalties, affecting the firm’s financial position.
- Inconsistent Profit Margins: RBZ's EBITDA margin fell sharply from 19.78% in FY21 to 10.79% in FY22, but then rose to 13.71% in FY23. Similarly, the net profit margin dropped from 9.11% in FY21 to 5.71% in FY22, before increasing to 7.76% in FY23.
Issue details
Issue type
Mainstream
Issue size
₹ 100 crore
Fresh Issue
₹ 100 crore
OFS
₹ -
Price range
₹ 95 - 100
Lot size
150 shares
Issue Objective
Net proceeds of the issue (fresh issue) will be utilised towards:
- Funding its working capital requirements; and
- General corporate purposes
Dates
Bidding open
19 Dec'23
Bidding close
21 Dec'23
Allotment date
22 Dec'23
Refund date
26 Dec'23
Listing
27 Dec'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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