Kalyan Jewllers India Limited

Started in 1993, Kalyan jewellers is one of the largest Jewellery companies in India based at Trissur, Kerala. Company were established by company's founder and one of company's Promoters, Mr. T.S. Kalyanaraman, who has over 45 years of retail experience, of which over 25 years is in the jewellery industry Company have since expanded to become a pan-India jewellery company, with 107 showrooms located across 21 states and union territories in India, and also have an international presence with 30 showrooms located in the Middle East as of December 31, 2020. All of company's showrooms are operated and managed by the company. Company intend to continue to open additional showrooms as company expect significant opportunity for further penetration in company's existing markets as well as in new markets, primarily in India. Company also sell jewellery through company's online platform at www.candere.com. Company design, manufacture and sell a wide range of gold, studded and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, which is company's highest-selling product category, to daily-wear jewellery. In Fiscal 2020, 74.77% of company's revenue from operations was from the sale of gold jewellery, 23.36% was from the sale of studded jewellery (which includes diamonds and precious stones), and 1.87% was from the sale of other jewellery. Company's Strengths 1. One of India's largest Jewellery companies with a pan-India presence.3. Wide range of jewellery product offering.4. Established brand built on the core values of trust and transparency. As per financial performance, Kalyan Jewellers has posted total income/net profits of Rs. 10,580.19 cr. / Rs. 102.82 cr. (FY18), Rs. 9,814.02 cr. / Rs. 24.74 cr. (FY19) and  Rs. 10,181.01 cr. / Rs. 144.60 cr. in FY20. For upto Q3 of FY21, it has reported net profit of Rs. (81.33) cr. on total revenue of Rs. 5,549.79 cr. So company has shown average results. Interest expense of company is very high. Company has posted an average EPS of Rs. 1.12 and average RoNW of 4.46% for last three fiscals. Issue is priced at a P/BV of 3.55 as per NAV of 24.52 on 31.12.20. As per FY20 earnings, on fully diluted equity post issue, P/E is around 62. If we attribute latest annualised earnings of FY21 on fully diluted equity post issue, then earnings are negative. So issue looks aggressively priced. As per RHP, the listed peers are shown in above table.  On BRLM's front, four BRLMs are associated with this IPO, and have handled around 20 IPO in last three fiscals. From last 10 IPOs, 2 are opened below issue price and remaining are opened above issue on the day of listing. As of now, 1 is trading below issue price and remaining are trading above issue price. ( As on 12.03.2021) As per financials, results of Kalyan Jewellers are average, RoNW is 4.46% for last three fiscals and as per FY20 earnings issue is priced at P/E of 61.97 and for annualised FY21 earnings are negative. Jewellery sector is very highly competitive and so company may not be able to improve margin. Performance of BRLM is good, So we give NEUTRAL rating to this IPO, risk taking investors may apply.

• 1 Mr. T.S. Kalyanaraman
• 2 Mr. T.K. Shetharam
• 3 Mr. T.K. Ramesh