About India’s Gems & Jewellery Market
India’s gems and jewellery sector is one of the largest in the world, accounting for 29% to the global jewellery consumption. India’s demand for gold reached 690.4 tonnes in 2019. In FY21 (till date), exports of gems & jewellery stood at US$ 11.62 billion. India’s import of gems and jewellery was US$ 24.41 billion.
About Kalyan Jewellers
Kalyan Jewellers is one of India’s largest Jewellery retail companies. The company generates a significant portion of revenues from gold jewellery, accounted for 74.77% in fiscal 2020 followed by studded (diamond & precious stone) and other jewellery segments. It has filed for an IPO and is currently in its allotment phase but remains a positive investment opportunity even in the future. The aim of the IPO has been to collect funds to further expansion of its pan-India presence.
Kalyan Jewellers as an investment opportunity
Kalyan Jewellers is an attractive investment opportunity. The company is one of the largest jewellery companies in India based on revenue in FY20 with 5.9 percent share in organised market. Thus, it holds significant market share with good long term prospects. It is a trusted brand with a strong network distribution and global presence. It has a wide product offering.
From a management standpoint, it is run by highly-experienced promoters and a strong professional senior and mid level team. Mr. T.S. Kalyanaraman, Mr. T. K. Seetharam, and Mr. T. K. Ramesh are the promoters of the company.
Another strength of Kalyan Jewellers is its ability to cater to regional tastes. The company’s hyperlocal strategy helps differentiate itself from other pan-India players. It works with local artisans and employs regional celebrities and endeavours to make designs that cater to different micro-markets it operates in.
Valuation of Kalyan Jewellers
The IPO is valued at a discount to Titan Industries, the largest peer. Thus, the reasonable pricing makes Kalyan Jewellers a favourable investment, especially for investors with higher risk appetite. From a pricing standpoint, the company has a price band of Rs 86–87. The upper price band in the P/E range of 58x to 88x. As per Technopak report, there is only one listed peer which is Titan Company, which is trading at P/E 84x. Hence Kalyan Jewellers share price of Rs 87 is fully priced. Kalyan Jewellers IPO was subscribed to 2.61 times after the bidding process closed on March 18.
Conclusion
To conclude, while Kalyan Jewellers’ financial results may not have been as fortified as its peers, it has a shining future as one of the leading jewellery brands in India.
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