The ₹270.20 crore initial public offering (IPO) of Manoj Vaibhav Gems 'N' Jewellers (Vaibhav Jewellers) kicked off for subscription on Friday, September 22. The company has fixed the price band of ₹204-215 and the issue will end on September 26.
Issue size: Vaibhav Jewellers IPO is a book-built issue. The offer comprises a fresh issuance of shares worth ₹210 crore, and an offer-for-sale of 28 lakh shares worth ₹60.2 crore by promoter Grandhi Bharata Mallika Ratna Kumari (HUF).
Objective: 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.
Subscription status: The issue has received a weak response from investors. By 12:50 pm on its first day of bidding, the IPO was subscribed just 8 percent against its offer. It received bids for 1.90 lakh shares against 87.97 lakh shares on offer. The category for retail investors was bid the most, 15 percent, followed by that of non-institutional investors (NII), which was subscribed to just 1 percent. However, the qualified institutional buyers (QIBs) portion received no bids till now.
Grey Market Premium: Shares were commanding a premium of ₹10 in the grey market today, indicating a 4.65 percent premium at listing ( ₹225). The GMP was ₹0 in the previous sessions.
However, it is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.
Reservation: The company has reserved 50 percent of equity shares in the offer for the qualified institutional bidders (QIBs), while non-institutional investors will get 15 percent of the offer. Retail investors will have the remaining 35 percent of shares reserved for them.
Lot size: Investors can bid for a minimum of 69 equity shares and their multiples thereof. Hence, one lot will cost investors ₹14,835.
Anchor investors: Ahead of the IPO, Vaibhav Jewellers raised ₹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 ₹215 apiece.
About the firm: Vaibhav Jewellers is a regional jewelry brand in South India and was incorporated in 2003. It 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. The company has 13 showrooms, including two franchisee showrooms, across eight towns and two cities in these two states. It is a 100 percent promoter-owned company.
Financials: The firm recorded robust earnings growth in past years with profit growing at a compound annual growth rate (CAGR) of 85.81 percent during FY21-FY23 to ₹71.6 crore in the financial year ended 2022-23, and the revenue from operations increasing at CAGR of 18.92 percent during the same period to ₹2,027.34 crore. Its net profit stood at ₹71.60 crore and revenue came in at ₹2,031.30 crore for the financial year ended March 31, 2023.
Book-running managers: Elara Capital (India) and Bajaj Capital are the book-running lead managers to the issue, while Bigshare Services is the registrar for the issue.
Important dates: The basis of the allotment of shares will be finalised on Tuesday, October 3 and the company will initiate refunds on Wednesday, October 4, while the shares will be credited to the Demat account of allottees on Thursday, October 5. Vaibhav Jewellers shares are likely to be listed on BSE and NSE on Friday, October 6.
StoxBox of BP Equities has a ‘subscribe’ rating for the issue.
"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," it said.
"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.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.