kalyan jewellers ipo Archives

Nitin Gadkari announces vehicle scrappage policy in Lok Sabha

Union Transport Minister Nitin Gadkari, on Thursday, announced the vehicle scrappage policy in the Lok Sabha. The policy will focus on removing vehicles older than 15-20 years from Indian roads. Owners of old vehicles will get strong incentives to scrap old and unfit vehicles. With this policy, raw materials like plastic, aluminium, steel, copper, would be recycled and will become a lesser cost component for the automotive industry. The minister said that states can make registration fees and road tax lower, which would encourage people to buy new vehicles. This ultimately leads to more sales for the automotive industry.

Read more here.

TGP Rise Fund to invest $200 million in Airtel Africa mobile money business

Bharti Airtel’s subsidiary, Airtel Africa, announced that investment firm TPG’s Rise Fund will invest $200 million (~Rs 1,452 crore) in the company’s mobile money business. The transaction values Airtel Africa’s mobile money business at $2.65 billion (~Rs 19,245 crore). Airtel Mobile Commerce (AMC) BV is currently the holding company for several of Airtel Africa’s mobile money operations. The Rise Fund will hold a minority stake in AMC BV upon completion of the transaction.

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Adani Green raises $1.35 billion from 12 international banks

Adani Green Energy Ltd (AGEL) has raised $1.35 billion (~Rs 9,800 crore) debt through definitive agreements signed with a group of 12 international lenders. The funds will initially be used to finance the 1.69 gigawatt (GW) hybrid portfolio of solar and wind renewable projects to be set up in four special purpose vehicles (SPVs) in Rajasthan. This is part of AGEL’s vision of scaling up its renewable energy capacity to 25 GW by 2025.

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Welspun Corp secures orders worth Rs 777 crore in domestic, overseas markets

Welspun Corp Limited said it has received multiple orders worth Rs 777 crore from the overseas and domestic markets. This includes an order of approximately 50 kilometric tonnes (KMT) received from a large client in the Middle East. With these orders, the company’s order book stands at 686 KMT- valued at Rs 5,300 crore. Mumbai-based Welspun Corp is a leading manufacturer of large diameter pipes.

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Dilip Buildcon receives financial closure for NHAI road project in Telangana

Dilip Buildcon announced that its wholly-owned subsidiary, Repallewada Highways, has received the financial closure letter from the National Highways Authority of India (NHAI) for a road project in Telangana. The project consists of four-laning of NH-613 from Repallewada to Telangana on hybrid annuity mode (HAM). The project cost is Rs 1140.5 crore.

Bajaj Auto amends dividend distribution policy

Bajaj Auto Limited has amended its dividend distribution policy to reward shareholders and boost return ratios. The policy will consider the surplus the company has while calculating the dividend payout as a percentage of profits after tax (PAT). The dividend payout will be up to 90% if the surplus funds are over Rs 15,000 crore.

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Varroc Engineering to produce EV chargers for Delta-Q Tech

Varroc Engineering Limited said it has entered into a contract manufacturing agreement with Canada-based Delta-Q Technologies Corp. The company will manufacture Delta-Q’s chargers in India to support the expansion of the electric two and three-wheeler market. Varroc Engineering is a leading automotive component manufacturer based in Aurangabad, Maharashtra.

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Ministry of Corporate Affairs investigating irregularities in Edelweiss’ ARC arm: Report

As per reports from multiple sources, the Ministry of Corporate Affairs (MCA) has ordered an inspection of the books of Edelweiss Asset Reconstruction Company (EARC) after a whistleblower wrote to the Prime Minister’s Office and Reserve Bank of India alleging fraud at the firm. The whistleblower has alleged that Edelweiss Group, along with its partner Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), diverted at least Rs 1,800 crore from EARC. Edelweiss Financial Services Ltd said it has not received any intimation of any inspection being conducted by MCA.

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Delhi HC restrains Future Retail-Reliance deal on Amazon’s plea

The Delhi High Court, on Thursday, restrained Future Retail from going ahead with the Rs 24,713-crore deal with Reliance Industries. The court has upheld the Emergency Arbitrator’s award that Amazon.com, Inc had won against Future Retail. A single-judge bench of Justice JR Midha held that the retail company has willfully violated Singapore International Arbitration Centre’s (SIAC) order. Future Group entities have been directed to pay a penalty of Rs 20 lakh.

Read more here.

IPO Updates:

Kalyan Jewellers

The Rs 1,175-crore initial public offering (IPO) of Kalyan Jewellers was subscribed 2.61 times on the final day of bidding. The portion reserved for retail investors was subscribed 2.82 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 1.91 and that of qualified institutional buyers (QIBs) 2.76 times.

Suryoday Small Finance Bank

The Rs 582-crore initial public offering (IPO) of Suryoday Small Finance Bank was subscribed 1.01 times on the second day of bidding. The portion reserved for retail investors was subscribed 2 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 20% and that of employees 17%. To know more about the IPO, click here.

Nazara Technologies

The Rs 582-crore initial public offering (IPO) of Nazara Technologies was subscribed 10.55 times on the second day of bidding. The portion reserved for retail investors was subscribed 44.47 times and that of employees 5.33 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 7.73 times and that of QIBs 72%. To know more about the IPO, click here.

One of the most awaited IPOs, especially amongst Keralites, has opened for subscription today— March 16, 2021. Kalyan Jewellers, which is part of one of the oldest business groups with a strong legacy in India, will soon go public. This IPO will be amongst four others that are hitting the markets this week. Let us have a detailed understanding of Kalyan Jewellers and its IPO.

Company Profile – Kalyan Jewellers

Kalyan Jewellers is one of the largest jewellery companies in India. It primarily designs, manufactures, and sells gold, studded, and other jewellery products for special occasions such as weddings and festivals. They offer a wide variety of traditional and contemporary jewellery designs in gold, diamond, and other precious metals. It opened its first showroom in Thrissur, Kerala in 1993. Since then, it has expanded rapidly and has established 107 showrooms across 21 states and union territories in India. The jewellery company has a strong presence in the Middle East with around 30 showrooms. Kalyan Jewellers also operates a network of 766 ‘My Kalyan’ stores (service centres) around the world. As of December 2020, nearly 78.19% of its revenue came from India, and the remaining 21.81% from the Middle East.

Graph showing the segment-wise revenue of the firm (as of December 31, 2020)

Over the years, Kalyan Jewellers has allocated a major part of its finances towards eye-catching advertisements or promotional activities. It has roped in a large number of prominent stars such as Amitabh Bachan, Katrina Kaif, Nagarjuna, and Manju Warrier, to name a few. These campaigns have played a vital role in driving sales growth.

The company’s strong growth and expansion can be attributed to the vision and efforts of the Kerala-based Kalyan Group. The jeweller is run by a set of experienced promoters and managers, headed by T.S. Kalyanaraman Iyer. It is also backed by one of the largest private equity firms in the world— Warburg Pincus. Kalyan Jewellers has established itself as the second-largest pan-India jeweller after Titan Company (Tanishq).

About the IPO

Kalyan Jewellers had received approval from market regulator SEBI to float an initial public offering (IPO) in October 2020. The public issue will open on March 16, 2021, and close on March 18, 2021. The total issue size of the IPO is Rs 1,175 crore. This comprises a fresh issue of 9.19 crore equity shares aggregating up to Rs 800 crore. It also includes an offer for sale (OFS) of 4.31 crore equity shares (aggregating up to Rs 375 crore) by its promoters. The price band for the IPO has been fixed at Rs 86-87 per share.

Retail investors like you and I can bid for a minimum of 172 equity shares (1 lot), which will amount to Rs 14,964. The maximum number of shares that can be applied by an individual investor is 2,236 equity shares (or 13 lots). Thus, the maximum amount one can invest in the IPO is Rs 1,94,532. But take care not to apply for more than 1 lot, as your capital may get blocked for no reason if the IPO is oversubscribed.

Kalyan Jewellers will utilise the net proceeds from the IPO for two main purposes:

To finance the company’s working capital requirements. A sum of Rs 600 crore from the total proceeds will be allocated for the same.
The remaining amount will be used to meet general corporate purposes.

The promoters, led by T.S Kalyanaraman and Highdell Investments Ltd, currently hold a 67.99% stake in the company. This figure will fall to 60.53% post the successful completion of the IPO.

Financial Overview

.	31 Dec 2020(FY 21)	31 March 2020 (FY20)	31 March 2019 (FY19)	31 March 2018 (FY18)
Total Assets	8,122.9	8,218.6	8,059.9	8,551.2
Total Revenue	5,549.79	10,181	9,814.02	10,580
Profit/Loss After Tax	(79.94)	142.27	(4.86)	140.9

(Values in Rs crore)

From the chart, it is clear that Kalyan Jewellers’ revenues have been fairly consistent/stable since 2018. However, it posted a net loss of Rs 4.8 crore in FY19. This can be attributed to the effect of the flash floods in 2018-19 in the southern regions of India (where the company has a strong foothold). It was able to return to a profit of Rs 142 crore in the next financial year. And now, the Covid-19 pandemic has severely impacted its overall operations and revenues in the current financial year. The company faced a one-time hit of Rs 40.2 crore for closing down showrooms in the Middle East (as they were making losses).

Over the past 3 years, the company’s revenue has grown at a CAGR of -2%. Earnings Before Interest and Tax (EBIT) has grown at a yearly rate of -0.9% during the same period. Total assets have remained in the range of Rs 8,000-crore levels. Thus, it is clear that Kalyan Jewellers is showing very sluggish (slow-paced) growth. Its Return on Net Worth (RoNW) is just 6.63%, which is very low compared to Titan Company’s RoNW of 22.38.

The company’s large debts are also a cause of concern. Currently, it has Rs 55.7 crore in long-term borrowings and Rs 2,635.5 crore in short-term borrowings. Total debt, including metal gold loans, stood at Rs 3,667 crore as of December 2020.

Risk Factors

The Covid-19 pandemic is likely to have caused a significant impact on the company’s business operations, revenues, and future results. Kalyan Jewellers had to temporarily close down its showrooms and ‘My Kalyan’ centres in India and the Middle East for a few months due to lockdown restrictions.
To a large extent, the company’s revenue and operations are impacted by global and domestic economic conditions. If there is a downturn in these factors (such as large fluctuations in gold prices), consumer spending on Kalyan’s products may be affected.
The company may be unable to respond to changes in consumer demands and market trends in a timely manner. It is quite difficult to assess or predict the preferences of customers, which keeps changing rapidly.
Kalyan Jewellers may not be able to establish arrangements with contract manufacturers and suppliers. It may also experience supply-chain disruptions or quality control risks in the operations of such parties.
The current geographic concentration of Kalyan’s operations exposes it to regional economic downturns or natural disasters. For example, the company’s operations were severely hit in 2018-19 due to flash floods in Kerala. The Kerala market accounts for nearly 10% of the overall revenue.
The ownership of retail outlets in Middle East countries is subject to restrictions of the Gulf Cooperation Council (GCC).

IPO Details in a Nutshell

IPO Date	March 16, 2021 – March 18, 2021
Issue Type	Book Built Issue IPO
Face Value	Rs 10 per equity share
IPO Price	Rs 86 to Rs 87 per equity share
Lot Size	172 shares
Issue Size	Aggregating up to 1,175 crore
Fresh Issue (goes to the company)	Aggregating up to Rs 800 crore
Offer for Sale (goes to promoters)	Aggregating up to Rs 375 crore
Listing Date	March 26, 2021
Listing At	BSE, NSE

Axis Capital, Citigroup Global, ICICI Securities, SBI Capital Markets, and BOB Capital Markets have been appointed as the book-running lead managers to the public issue. Kalyan Jewellers had filed draft papers for its IPO in August 2020. You can read it here.

Conclusion

In the current scenario, Kalyan Jewellers is having a tough time improving its revenues. However, the power behind its brand and legacy is well-known by most of us. Over the years, the company has been able to cater to the needs of Indians and their never-ending love for buying gold. As always, do consider the risks associated with this company and come to your own conclusion.

Before applying for Kalyan Jewellers’ IPO, I will personally wait to see if the portion reserved for institutional investors gets oversubscribed. Looking at the recent trend, most IPOs are providing a select few with amazing listing gains. Kalyan Jewellers’ IPO is most likely to attract significant investor participation as well.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section.