Kalyan Jewellers IPO open: Why are  Brokerage firms asking investors to subscribe?

Today, Kalyan Jewellers IPO opened for subscription. This Warburg Pincus group-backed jeweller is expected to raise Rs 1,175 crore through an initial public offer (IPO). The company has priced its shares in a band of Rs 86-87 per piece. It will close on March 18.

There are some brokerage firms that have recommended investors to subscribe to this IPO. Below are the details:


Kalyan Jewellers, incorporated in 1993 by founder T S Kalyanaraman, is one of the largest jewellery companies in India based on revenue in FY20 (source: Technopak Report) with 5.9 per cent share in organised market. Furthermore, their shareholders include Highdell Investment Ltd (Mauritius based private equity funds), belonging to the Warburg Pincus group. It has a pan India presence with 107 showrooms located across 21 states and union territories in India and also has an international presence with 30 showrooms located in the Middle East as on December 31, 2020. High gold inventory of Rs 5,168 crore as of December 2020, with average annual turnover of 208 days during FY18 to FY20, adds support to valuations. Current Debt -Equity ratio (D/E) is 2.1, post IPO D/E will reduce.

KR Choksey

Kalyan Jewellers face competition from both organised and unorganised companies in the Indian jewellery industry. The company also faces competition from organised jewellery companies who compete with them on a national, regional and local level. While their primary competitor at the national level is Titan (Tanishq), they have multiple competitors at various regional and local levels across India. Tanishq (Titan Company Limited) is the leader in the Indian Jewellery market with 3.9 per cent share of the overall jewellery market and 12.5 per cent share of the organised jewellery market, based on FY19. For the same period, Kalyan Jewellers, also one of the largest jewellery companies in India based on revenues, had 1.8 per cent share of the overall jewellery market and 5.9 per cent share of the organized jewellery market. At the upper band of issue price, Kalyan Jewellers will trade at an EV/EBITDA multiple of 22x of its annualised 9MFY21 revenue, which is at a discount to its listed peer like Titan (79.8x), however it is likely to trade at a premium to its peers like TBZ Ltd (7.5x). Looking at the growth potential in the company listing gains are anticipated.

Angel Broking

It is India's largest jewellery companies with a pan-India presence and strong brand equity; wide range of product offerings targeted at a diverse set of customers; and a strong promoter background with extensive experience in retail and jewellery. The jeweller reported poor consolidated top-line and bottom-line (over FY 2018-20), hence growth concerns remain; and slowdown in the economy could impact the overall profitability of the company. In terms of valuations, the pre-issue TTM EV/Sales works out to 1.5 (at the upper end of the issue price band), which is low compared to Titan Company (trading at 7.7x). However, Titan company has a better financial track record compared to Kalyan Jewellers. Going forward, the firm believes that Kalyan Jewellers would perform better on the back of a strong brand and number of stores in India and internationally.


Kalyan Jewellers is driven by its strong brand, scalable business model, effective operational processes and proven track record of profitable expansion. Further, its ‘Hyperlocal’ strategy and ‘My Kalyan’ network supports in maintaining transparency, building customers trust as well as reaching more customers and new geographies. The brokerage firm believes players like Kalyan Jewellers have a good opportunity to expand in these markets and gain market share. Going forward, the company plans to increase focus on high margin business like studded jewellery, innovate new designs in gold, expand showroom network and strengthen customer reach will bode well for the growth. On the valuation front, the company is valued at 51x FY20 EPS.

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