Manoj Vaibhav Gems 'N' Jewellers IPO: Should you subscribe to the issue?

The initial public offering (IPO) of Manoj Vaibhav Gems 'N' Jewellers (Vaibhav Jewellers) kicks off for subscription on Friday, September 22. The company has fixed the price band of Rs 204-215 and investors can make a bid for a minimum of 69 equity shares and its multiples thereof. The bidding will conclude on Tuesday, September 26.

Manoj Vaibhav Gems 'N' Jewellers is looking to mop-up Rs 270.20 crore via its initial stake sale, which includes a sale of fresh equity shares worth Rs 210 crore, while its promoter Grandhi Bharata Mallika Ratna Kumari (HUF) will offload 28,00,000 shares, aggregating to Rs 60.20 crore through offer for sale (OFS) route.

The company intends to utilise net proceeds from the fresh issue sale towards financing the proposed eight new showrooms including capital expenditure cost and inventory cost of new showrooms; and general corporate purposes. On the other hand, proceeds from OFS shall go to the selling shareholders.

Vaibhav Jewellers raised Rs 81.06 crore from eight anchor investors including Quantum-State Investment Fund, Tano Investment Opportunities Fund, Nexus Global Opportunities Fund, Coeus Global Opportunities Fund, Neomile Growth Fund, AG Dynamic Funds, Chhatisgarh Investments and Eminence Global Fund investors by allocating 37,70,160 equity shares at Rs 215 apiece.

Vaibhav Jewellers is a regional jewelry brand in South India and was incorporated in 2003, which offers gold, silver, and diamond jewelry; precious gemstones; and other jewelry products. It sells its product range through its retail showrooms as well as through its website.

Vaibhav Jewellers cater to all economic segments of the micro markets of Telangana and Andhra Pradesh through their retail showrooms with a focus on both rural and urban markets. The company has 13 showrooms, including two franchisee showrooms, across eight towns and two cities in these two states.

For the period ended on June 30, 2023 Vaibhav Jewellers reported a net profit of Rs 19.24 crore, with a revenue of Rs 510.21 crore. However, its net profit stood at Rs 71.60 crore and revenue came in at Rs 2,031.30 crore for the financial year ended March 31, 2023.

The company has reserved 50 per cent of equity shares in the offer for the qualified institutional bidders (QIBs), while non-institutional investors will get 15 per cent of the offer. Retail investors will have remaining 35 per cent shares reserved for them.

Elara Capital (India) and Bajaj Capital are the book running lead managers to the issue, while Bigshare Services is the registrar for the issue. Shares of the company will be listed on both BSE and NSE. Brokerage firms have a mixed view on the issue. Here's what they say about the IPO of Vaibhav Jewellers:

StoxBox of BP Equities
Rating: Subscribe
The nature of the business is such that a lot of costs are front-ended but once they are mitigated, profits can grow rapidly in coming years. It has maintained an asset turnover ratio of 1.8 times and above which is a good sign for a constantly expanding business. The company looks poised to capture a further share of the unorganized jewellery market, said StoxBox by BP Equities.

"Based on the prospects of the sector, the company’s product catalogue, its stronghold in the southern markets and a good track record, the pricing looks attractive vis-à-vis its peers as it values at 11.7 times of its FY23 earnings. We, therefore, recommend a 'subscribe' rating to the issue," it added.

Sushil Finance
Rating: Neutral
The issue is asking for a PE multiple of 11.7 times on the upper end FY23 and a PE of 10.92 times annualizing diluted EPS for Q1FY24. The listed peers like Titan trading at P/E 92 times and Tribhovandas Bhimji Zaveri is trading at P/E of 15 times and industry average P/E is 30 times. Hence, the IPO Price band at P/E of 12-16 times is attractively priced, said Sushil Finance with a 'neutral' view.

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