Kalyan Jewellers files DRHP for Rs 1,750 crore IPO

Home-grown jewellery maker Kalyan Jewellers India on Monday filed the draft prospectus for Rs 1,750 crore initial public offer (IPO). The gold retailer, backed by private equity firm Warburg Pincus, has filed its draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi) for listing of its share on BSE and NSE. The exact timeline of the IPO, issue size and price band of shares are yet to be ascertained.

The development came at a time when gold stocks are witnessing strong response from investors as they rushed to add the precious metal in their portfolios in wake of volatility in equity market amid coronavirus pandemic. Stocks related to gold and jewellery business such as Titan, Rajesh Exports, PC Jewellers and Vaibhav Global have grabbed investor attention after coronavirus outbreak.

The Kerala-based company intends to raise Rs 1,000 crore by fresh issuance of shares, while its promoter T. S. Kalyanaraman and Warburg Pincus will sell stake worth Rs 250 crore and Rs 500 crore, respectively.

The fund proceeds from the IPO will be used to meet working capital requirements and other general corporate purposes, Kalyan Jewellers said in its draft prospectus filed with Sebi.

Investment banks Axis Capital, Citi, ICICI Securities and SBI Capital are working on the IPO while Law firm AZB & Partners is the counsel to the company. Khaitan & Co is advising the investment banks, while Cyril Amarchand Mangaldas is advising Warburg Pincus.

The IPO will facilitate a partial exit for Warburg Pincus, which currently owns 24 per cent shares in the company. The private equity major has so far invested Rs 1,700 crore in the jeweler, starting with Rs 1,200 crore in 2014 and another Rs 500 crore in 2017.

For the full financial year ended March 31, 2020, Kalyan Jewellers reported net profit of Rs 142.2 crore as against net loss of Rs 4.8 crore in the previous year. The revenue from operations stood at Rs 10,100.9 crore as compared to Rs 9,770 crore in the last fiscal. In FY20, the company generated 78.19 per cent of its revenue from India and 21.81 per cent from the Middle East.

Starting with one store in Kerala in 1993, Kalyan Jewellers has 137 showrooms and 750 mykalyan stores across India as well as Gulf countries. It also sells jewellery through its online platform 'candere'.

"Our total showrooms have increased from 77 as of March 31, 2015 to 137 showrooms as of June 30, 2020, and we intend to continue to open additional showrooms as we expect significant opportunity for further penetration in our existing markets as well as in new markets, primarily in India," the company said in its prospectus.

By Chitranjan Kumar

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