Kalyan Jewellers, ipo, public offering
The Kalyan Jewellers IPO is now open for subscription and investors can place bids till March 18. The public offering has created quite a buzz, but experts have also highlighted some risks. Here is all you need to know before subscribing:
The much-awaited Kalyan Jewellers initial public offering (IPO) opened for subscription on Tuesday. The Kerala-based jewellery chain’s public offering has created a buzz among investors but several experts have asked them to approach cautiously.
Let’s start off with some information about the IPO first. The Kalyan Jewellers IPO will be open for subscription for investors from March 16 and it will close on March 18. For the IPO, the jewellery company has fixed the price band at Rs 86-87 per share.
The Warburg Pincus-backed jewellery chain plans to raise Rs 1,175 crore from the IPO. The offer comprises a fresh issue of shares worth Rs 800 crore and an offer-for-sale (OFS) of Rs 375 crore.
Investors can bid for a minimum of 172 equity shares and in multiples thereafter. Given the price band of Rs 86-87 per share, the minimum subscription bid for the IPO could range from Rs 14,792 to Rs 14,964.
Should you subscribe?
Many analysts say that the Kalyan Jewellers public offering has good long-term potential and is relatively cheaper compared to the value of Titan. While it had been trading at a premium on the grey market, it was not much compared to other issues that are expected to open this week.
Simply put, analysts are betting on the company's future potential and ability to grow over a longer period.
Amarjeet Maurya, AVP, Mid Caps, Angel Broking Ltd said the IPO has got a good response from anchor investors, but added that the financial track record of Kalyan Jewellers is weak compared to Titan Company.
“Ahead of IPO opening Kalyan Jewellers (KJIL) got a good response from anchor investors which were around ~Rs 352 cr (~30% of IPO issue size). The name investors are Government of Singapore, Sundaram Mutual Fund, BNP Paribas, HDFC Life Insurance Company etc. We have a subscriber rating on IPO,” Maurya said.
“In terms of valuations, the pre-issue TTM EV/Sales works out to 1.4 (at the upper end of the issue price band), which is low compared to Titan Company (trading at 7.7x). However, Titan company has a better financial track record compared to KJIL. Going forward, we believe that KJIL would perform better on the back of a strong brand and number of stores in India & internationally,” he added.
It may be noted that Kalyan Jewellers is one of India’s largest jeweller chains, with over 100 showrooms located across 21 states. It also has around 30 showrooms in the Middle East.
In a note, brokerage firm Angel Broking said Kalyan Jewellers has good growth potential due to its pan-India presence and strong brand equity. It has a diversified range of offers and strong promoter background with extensive experience in retail and jewellery.
However, Angel Broking has also listed some concerns for investors. It highlighted that Kalyan Jewellers reported poor consolidated top-line and bottom-line over FY2018-20. “Hence, growth concerns remain; slowdown in the economy could impact the overall profitability of the company, it added.
Analysts at Geojit Financial Services also assigned a ‘subscribe’ rating on a long-term basis. However, the analysts clearly mentioned that improvement in profitability and balance sheet is necessary for the company’s growth.
The analysts at the brokerage firm also warned investors of some risks including the company’s ability to maintain brand strength and further development. The short-term performance of the company may not be great, given its rich valuation compared to peers.
(Disclaimer: All investment tips mentioned in this article is based on information received from experts at brokerage firms. The views expressed by brokerage firm experts are their own and not that of IndiaToday.in or its management. Investors should check with certified experts before investing in the issue.)
Source: INDIA TODAY
Kalyan Jewellers, ipo, public offering