Company and IPO Overview:
Manoj Vaibhav Gems 'N' Jewellers Limited was established in the year 2003. The company caters to all economic segments of the micro markets of Andhra Pradesh and Telangana through its dedicated brand showrooms and has a strong focus on the rural market and also a special focus on the urban areas. Rural markets have a larger share of the retail jewellery market, and the inelastic demand for gold in rural areas offers great growth potential.
With over 28 years of presence in the markets in which they operate, they have built a strong reputation. Their “Vaibhav Jewellers” brand is a household name in Andhra Pradesh and Telangana with a loyal customer base. Each of their showrooms houses a diverse, exquisite and extensive range of gold, diamond, gemstone, platinum and silver jewellery and/or items.
Manoj Vaibhav Gems 'N' Jewellers Ltd offers five jewellery categories:
1. Daily wear: Simple, plain gold items like bangles and rings.
2. Bridal: Detailed pieces for weddings.
3. Occasion Wear: Special designs for events like Mehandi, Sangeet, and Roka.
4. Antique: Ethnic styles for festivals and housewarmings.
5. Temple Jewellery: Handcrafted, traditional pieces for festive wear.
Manoj Vaibhav Gems IPO is the next main board IPO which is ready to go public, the company is about to raise around ₹ 270.20 crores via IPO comprising Fresh Issue of ₹ 210 crores and Offer For Sale upto ₹ 60.20 crores. The price band of the issue is ₹ 204 to ₹ 215 with a minimum market lot of 69 shares. Manoj Vaibhav Gems 'N' Jewellers IPO subscription quota for retail is 35.00%, NII is 15.00% and QIB is 50.00%.
Financials (rounded off):
Date | Total Revenue (₹ in cr) | PAT (₹ in cr) |
31/03/2021 | 1443 | 41 |
31/03/2022 | 1698 | 44 |
31/03/2023 | 2031 | 72 |
Objectives of the Issue:
1. Financing the Establishment of the proposed 8 new showrooms, i.e. Capital expenditure and inventory cost for the proposed eight (8) new showrooms.
2. General corporate purposes.
IPO Details:
IPO Date | 22/09/2023-26/09/2023 |
Face Value | ₹10 per share |
IPO Price Band | ₹204-₹215 per share |
IPO Lot Size | 69 Shares |
Listing at | NSE, BSE |
Basis of Allotment | 03/10/2023 |
Credit of Shares in Demat | 05/10/2023 |
Listing Date | 06/10/2023 |
Pre-Issue Shareholding | 100% |
Post-Issue Shareholding | 74.27% |
Retail Minimum Lot Size | 69 shares (₹14,835) |
Valuations & Margins:
Indicators | FY 21 | FY 22 | FY 23 |
EPS | 5.31 | 11.18 | 18.32 |
P/E | - | - | 11.74 |
EBITDA (%) | 4.85 | 6.20 | 7.06 |
ROCE (%) | 10.54 | 13.77 | 17.71 |
Important things to note about the Company:
Top reasons to consider the IPO:
1. In the last 2 years, the revenues growth has been robust yet steady and the same can also be said about the profit growth which is up more than 3 fold in the last 2 years. Purely on the strength of the prospects of the sector, its product catalogue, its strong hold on the southern markets, and the track record.
2. ROE above 20% is a fairly attractive ratio support to have. This is a business where a lot of costs get front-ended but once these costs are defrayed, the profits can multiply rapidly in later years.
3. The jewelry company has maintained an impressive rate of sweating assets as is evident from the asset turnover ratio. It has consistently averaged above 1.8X, which is a very good sign for a business that is constantly expanding and investing.
4. “Vaibhav jewelers” offer diverse product designs at various price ranges to customers and is positioned to benefit as rural markets contribute to 58% of the jewellery demand in India, even after rise in gold prices or during post harvest seasons.
Risk Factors to watch out in the IPO:
1. Significant working capital requirements and need for financing making up ₹361 crore of working capital loans and ₹332 crore of outstanding capital loans as of 15 August 2023.
2. Concentration of the business in the state of Andhra Pradesh and Telangana which exposes it to socio-economic or geo-political risks.
3. Operates in a competitive market and faces competition from other jewellery retailers.
4. “Vaibhav jewelers” experienced negative cash flow from operating activities in FY21 and from financing activities in FY22 and FY23.
Crisp Insights:
Manoj Vaibhav Gems IPO GMP Today: The Company is commanding a GMP of NIL.
Manoj Vaibhav Gems GMP is weak and hence, investors need to be careful.
Manoj Vaibhav Gems IPO Review: While pricing of the IPO does matter here, what is more critical is the eventual PAT margins that will sustain and the ROE that can be held by the company. The idea lies in seeing how much of the unorganized jewellery market the company can capture in the coming years. Based on annualized FY24 earnings, the issue appears fully priced. Well-informed investors may plan moderate investments for the medium to long term.
Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.
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