Kalyan Jewellers IPO day 2: Issue fully subscribed, retail portion booked 1.22 times

Kalyan Jewellers India Limited (the “Company’), one of the largest jewellery companies in India based on revenue as of March 31, 2020, according to the Technopak Report, got an overall subscription of 1.22 times on Day 2 of the IPO. The retail portion received a great response and has been subscribed 1.92 times on day 2. Strong brand presence and the hyperlocal nature of this consumer jewellery brand have given impetus to the retail subscription.

The portion set aside for non-institutional investors was subscribed 90 percent, and qualified institutional buyers have put in 25 percent bids against the reserved portion of 2.72 crore equity shares.

Various brokerage houses are giving it a thumbs-up for investors, making it one of the attractive IPOs of the season, especially when multiple IPOs have hit the capital market. Hem Securities, Religare Broking, KR Choksey, Angel Broking and Geojit Securities are some of leading brokerage firms that have given a SUBSCRIBE rating to the Kalyan Jewellers India Ltd IPO.

Hem Securities in its report has given a subscribe verdict stating that the company is one of the established brands& among one of the India’s largest jewellery companies with a Pan-India presence & wide range of product offerings & strong promoters base but looking after financial performance we recommend investor with high risk apetite to subscribe the issue for short term. However investor with long term horizon can apply for the issue.

Religare Broking in its report says, that “Kalyan Jewellers has a good opportunity to expand in these markets and gain market share as it has a strong product portfolio and they use local artisans as contract manufacturers to aligns with local tastes, which would cater to rising demand. Also, its ‘My Kalyan’ network which focuses on marketing and customer engagement in these areas would further support growth. Going forward, the company plans to increase focus on high margin business like studded jewellery, innovate new designs in gold, expand showroom network and strengthen customer reach will bode well for the growth. On the valuation front, the company is valued at 51x FY20 EPS. We have a positive view on Kalyan Jewellers and investors can Subscribe for the long term.”

K R Choksey in the report has given the IPO a thumb-up and a ‘SUBSCRIBE’ rating to Kalyan Jewellers India Ltd IPO. The report states that, Kalyan Jewellers face competition from both organized and unorganized companies in the Indian jewellery industry. While their primary competitor at the national level is Titan (Tanishq), the brand has multiple competitors at various regional and local levels across India. Tanishq (Titan Company Limited) is the leader in the Indian Jewellery market with 3.9% share of the overall jewellery market and 12.5% share of the organized jewellery market, based on FY19. For the same period, Kalyan Jewellers, also one of the largest jewellery companies in India based on revenues, had 1.8% share of the overall jewellery market and 5.9% share of the organized jewellery market.

The company also raised Rs 352 crore from its anchor book subscription ahead of the IPO, allocating 40,448,275 equity shares to 15 anchor investors and at the upper price band of ₹87 per equity share. Some of the marquee anchor investors include Government Of Singapore Sundaram MF, HDFC Life Insurance Company Limited, Calypso Global Investment Fund, Segantii India Mauritius, Kuber India Fund, Moon Capital Trading PTE. Ltd, Edelweiss Crossover Opportunities Fund (Series-II), Baroda Large & Mid-Cap Fund, BNP Paribas Arbitrage – ODI, Cohesion Mk Best Ideas Sub-Trust were part of the anchor allotment.

The Offer comprises initial public offering of Equity Shares of the Company aggregating up to ₹11,750 million, comprising (a) a fresh issue aggregating up to ₹8,000 million (“Fresh Issue”); and (b) an offer for sale aggregating up to ₹3,750 million, comprising offer for sale of Equity Shares aggregating up to ₹1,250 million by Mr. T.S. Kalyanaraman (“Promoter Selling Shareholder”) and offer for sale of Equity Shares aggregating up to ₹2,500 million by Highdell Investment Ltd (“Investor Selling Shareholder” and together with the Promoter Selling Shareholder, the “Selling Shareholders”).

The Offer includes a reservation aggregating up to ₹20 million, for subscription by Eligible Employees (the “Employee Reservation Portion”). The Offer less the Employee Reservation Portion is hereinafter referred to as the “Net Offer”.

Bids can be made for a minimum of 172 Equity Shares and in multiples of 172 Equity Shares thereafter.

Axis Capital Limited, Citigroup Global Markets India Private Limited, ICICI Securities Limited and SBI Capital Markets Limited are the Global Co-ordinators and Book Running Lead Managers to the Offer. BOB Capital Markets Limited is the Book Running Lead Manager to the Offer.

Image Courtesy: Money Control

News Courtesy: Retail Jeweller India News Service