Motisons Jewellers IPO opens today: Should you subscribe to the issue?

Motisons Jewellers is all set to launch its initial public offering (IPO) for bidding on Monday, December 18, 2023. The company aims to sell its shares in the price range of Rs 52-55 apiece, with a lot size of 250 equity shares and multiples thereafter. Investors can participate in the bidding process until Wednesday, December 20.

Established in October 1997, Motisons Jewellers specializes in the sale of gold, diamond, and kundan jewellery, along with a diverse range of other jewellery products. The company offers an extensive product line, including traditional, modern, and combination designs across various jewellery categories. Its flagship store, Motisons Tower, is located in Jaipur, Rajasthan.

Motisons Jewellers is seeking to raise a total of Rs 151.09 crore through its primary stake sale, comprising the issuance of 27,471,000 fresh equity shares. The net proceeds from the IPO will be utilized for purposes such as repaying existing borrowings from scheduled commercial banks, funding working capital requirements, and addressing general corporate needs.

Motisons Jewellers raised a little over Rs 36 crore from anchor investors as the company has allotted 66 lakh equity shares to two funds at Rs 55 apiece. Meru Investment Fund PCC-Cell 1 Zinnia Global Fund PCC-Cell Dewcap Fund participated in the anchor book.

The company's diverse range of jewellery products caters to various occasions, including weddings, celebrations, and everyday use, suitable for all ages and genders, and available at different price points. Motisons Jewellers boasts over 300,000 designs in gold, diamonds, and other materials.

As of June 30, 2023, Motisons Jewellers reported a net profit of Rs 5.48 crore, with a revenue of Rs 86.76 crore. For the financial year ending on March 31, 2023, the company's net profit stood at Rs 22.20 crore, with a revenue of Rs 366.81 crore.

Holani Consultants serves as the sole book running lead manager for the Motisons Jewellers IPO, with Link Intime India Private acting as the registrar for the issue. Shares of Motisons Jewellers are expected to be listed on both BSE and NSE on Tuesday, December 26. Here's what analysts say about the IPO of Motisons Jewellers:

IndSec Research
Rating: Subscribe with caution
The IPO is priced at 24.4 times FY23 PE, which is 24 per cent discount to its industry peers. Motisons jewellers is a regional player with a solid track record of two decades. The company offers 3,00,000 designs in gold, diamond and other jewellery across different price points. Motisons underperformance the industry average, said IndSec Research with a 'subscribe for long term' tag.

"The growth in Indian jewellery has been driven by rising middle class population and sharp increase in disposable income amongst youth. Motisons has grown its revenue,Ebitda, PAT at a CAGR of 31 per cent, 26 per cent and 51 per cent, respectively over FY21-23. It has a healthy operating margin but is weak in Inventory days, working capital days and leverage ratios," it added.

Swastika Investmart
Rating: Subscribe with caution
Motisons Jewellers has a diversified product portfolio and has demonstrated a strong track record of growth. Motison's commitment to retail network expansion and technology integration further strengthens its growth prospects. However, the highly competitive landscape and dependence on third-party suppliers present key challenges, said Swastika Investmart.

"The company is susceptible to negative publicity and seasonal demand fluctuations. Despite these considerations, the IPO's attractive valuation of 16 times P/E offers a degree of risk mitigation. Considering Motisons' strong brand, proven track record, and growth plans, alongside the current market sentiment," it added, recommending applying for this IPO with cautious optimism.

Capital Markets
Rating: Avoid
The company is dependent on third parties for supplying its products. The company may be unable to maintain or establish formal arrangements with such third parties, and any disruptions at such third-party production or manufacturing facilities and their supply chains arrangements, or failure of such third parties to adhere to the relevant quality standards may have a negative effect on the company‘s business, said Capital Markets.

The operations of the company are constrained due to geographical concentration of its operation as all of its four showrooms are in Jaipur, Rajasthan. Operations of the company are vulnerable to intense competition amidst fragmented gems & jewellery industry. The margins of the company are exposed to volatility in prices of gold and silver, it added, suggesting to avoid the issue.

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