Moksh Ornaments Limited

Started in 2012, Moksh Ornaments is Mumbai based company engaged in the business of manufacture and wholesale of jewellery. The jewelleries are manufactured on job work basis at Kolkata and Mumbai. Company primarily sells gold jewellery and its product profile includes bangles, chain, and mangalsutra. Company gets its products designed by third party designers. Commpany procure the required gold from various banks and local markets. Customers of the company get the jewellery hallmarked from BIS recognized Assaying and Hallmarking Centre. Company has return policy which is limited to taking back products which are damaged in transit, apart from that company does not entertain any returns. Major customers of the company are Nakshatra Jewellery, Pragati Gold Pvt. Ltd, Shakti Gems & Jewels, S. K.Traders, Mayur Gold Private Limited, Rathod Jewellers, Chandukaka Saraf & Sons, Sancheti Ornaments Private Limited, Neelkanth Jewellers, Adgavkar Saraf Private Limited, etc. On performance front, MOL has reported turnover/net profits of Rs. 80.95 cr. / Rs. 0.13 cr. (FY14), Rs. 110.91 cr. / Rs. 0.17 cr. (FY15), Rs. 143.01 cr. / Rs. 0.15 cr. (FY16) and Rs. 239.93 cr. / Rs. 2.87 cr. (FY17).  For the first seven months of the current fiscal ended on 31.10.17 it has posted net profit of Rs. 1.89 crore on a turnover of Rs. 169.43 crore.  So there is sudden rise in top and bottom lines for last 19 months, which is surprising. For past three fiscals it has posted an average EPS of Rs. 3.23 and an average RoNW of 14.86% on an equity base of Rs. 5.17 crore. Issue is priced at a P/BV of 2.25 on the basis of its NAV as on 31.10.17 and at a P/BV of 1.77 on the basis of post issue NAV. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 12 plus against industry average of 42 plus and peers trading at a P/E of around 34 (PCJ), 46 (Thangamayl) and 42 (TBZ) (as on 18.12.17). Thus issue pricing appears reasonable. On merchant banker's front, this is the 21st mandate from its stable in past three years. Out of last 10 listings, 3 opened at a discount, 2 at par and the rest at a premium ranging from 5% to 20% to offer price on the day of listing. As per financials, company's growth is good, RoNW is 14.86% for last three fiscals and issue looks reasonably priced as per latest earnings. With implementation of GST, organized players are going to get more market share in upcoming years. So company can maintain good growth in upcoming years. Only concern is sudden rise in bottom line and top line in last 19 months. So, we give SUBSCRIBE rating to this SME IPO.

• 1 Mr. Amrit J. Shah
• 2 Mr. Jawanmal M. Shah