What you must know about Manoj Vaibhav Gems ‘N’ Jewellers IPO?

Manoj Vaibhav Gems 'N' Jewellers Ltd was incorporated in the year 2003. It is a very strong and well-entrenched jewellery brand in South India and also goes under the brand of Vaibhav Jewellers. Manoj Vaibhav Gems 'N' Jewellers Ltd offers gold, silver, and diamond jewellery in different traditional and modern designs for its customers. In addition, it also sells precious gemstones, and other jewellery products through retail showrooms offline as well as through its website online. Manoj Vaibhav Gems 'N' Jewellers Ltd predominantly caters across economic segments to the micro markets of Andhra Pradesh and Telangana; two states with a substantial penchant for gold and jewellery purchase. Manoj Vaibhav Gems 'N' Jewellers Ltd broadly caters to the rural and to the urban market. The company currently has 13 showrooms (inclusive of 2 franchisee showrooms) across 8 towns and 2 cities in the states of Andhra Pradesh and Telangana.

Manoj Vaibhav Gems 'N' Jewellers Ltd  offers 5 classes of jewellery for its customers. The Daily-wear Jewellery is plain gold with no stone studding and is preferred for daily use. These include plain gold bangles, simple earrings, plain gold band rings etc. The second is Bridal Jewellery which offers a wide choice of jewellery for women and women for the big occasion. These are more elaborate in detail. Thirdly, the Occasion Weal Jewellery is an extension of bridal jewellery and can be segregated for functions like Mehandi, Sangeet, Roka, etc. Fourthly, there is antique jewellery with fairly elaborate and ethnic workmanship and is used for the relic look. This is more for festivals, house warming etc. Lastly, there is the unique classification of Temple Jewellery, which is again classic workmanship based. Here each piece is curated and handmade. This goes well with tradition festive wear. In short, the company has an offering for every possible Indian occasion. The issue will be lead managed by Bajaj Capital and Elara Capital. Bigshare Services Private Ltd will be the registrar to the issue.

Highlights of the Manoj Vaibhav Gems ‘N’ Jewellers IPO issue

Here are some of the key highlights to the public issue of Manoj Vaibhav Gems ‘N’ Jewellers IPO.

• Manoj Vaibhav Gems ‘N’ Jewellers Ltd has a face value of ₹10 per share while the price band for the book building IPO has been set in the band of ₹204 to ₹215. The final price will be discovered within this band, through the process of book building.
   
• The IPO of  Manoj Vaibhav Gems 'N' Jewellers Ltd will be a combination of a fresh issue and an offer for sale (OFS). The fresh issue portion comprises the issue of 97,67,442 shares (97.67 lakh shares approximately), which at the upper price band of ₹215 per share will translate into fresh issue size of ₹210 crore.
   
• The offer for sale (OFS) portion of the IPO comprises the issue of 28,00,000 shares (28 lakh shares), which at the upper price band of ₹215 per share will translate into an offer for sale (OFS) size of ₹60.20 crore.
   
• Therefore, the overall IPO portion will comprise of the issue of 1,25,67,442 shares (1.26 crore shares approximately), which at the upper price band of ₹215 per share will translate into a total IPO issue size of ₹270.20 crore.

While the fresh issue will be capital and EPS dilutive, the offer for sale portion will only result in transfer of ownership. The entire OFS size of 28 lakh shares will be offered by the promoter, Grandhi Bharata Mallika Ratna Kumari (HUF). The proceeds of the fresh issue portion will be used to finance the opening of 8 new stores; including the capex and the inventory cost for these showrooms. A small part of the funds raised will also be used for general corporate purposes.

Promoter holdings and investor quota allocation quota

The company was promoted by Grandhi Bharata Mallika Ratna Kumari (HUF), Bharata Mallika Ratna Kumari Grandhi, and Grandhi Sai Keerthana. Currently the promoters hold 100.00% of the company, which will get diluted post the IPO to 74.27%. As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyers (QIBs), while 35% of the total issue size is reserved for the retail investors. The residual 15% is kept aside for the HNI / NII investors . The stock of  Manoj Vaibhav Gems ‘N’ Jewellers Ltd will be listed on the NSE and on the BSE. The table below captures the gist of the allocation to various categories.

Lot sizes for investing in the IPO of  Manoj Vaibhav Gems ‘N’ Jewellers Ltd

Lot size is the minimum number of shares that the investor has to put in as part of the IPO application. The lot size only applies for the IPO and once it is listed then it can be even traded in multiples of 1 shares since it is a mainboard issue. Investors in the IPO can only invest in minimum lot size and in multiples thereof. In the case of  Manoj Vaibhav Gems 'N' Jewellers Ltd, the minimum lot size is 69 shares with upper band indicative value of ₹14,835. The table below captures the minimum and maximum lot sizes applicable for different categories of investors in the IPO of  Manoj Vaibhav Gems ‘N’ Jewellers Ltd.

It may be noted here that for the B-HNI category and for the QIB (qualified institutional buyer) category, there are no upper limits applicable.

Key dates for  Manoj Vaibhav Gems ‘N’ Jewellers Ltd IPO and how to apply?

The issue opens for subscription on 22nd September 2023 and closes for subscription on 26th September 2023 (both days inclusive). The basis of allotment will be finalized on 03rd October 2023 and the refunds will be initiated on 04th October 2023. In addition, the demat credits are expected to happen on 05th October 2023 and the stock will list on 06th October 2023 on the NSE and the BSE.  Manoj Vaibhav Gems ‘N’ Jewellers Ltd offers a very unique combination. It has an established and tested business model; it is into an industry that is considered the future of the marketing model, which entails an omnichannel approach by syncing online and offline marketing models. Let us now turn to the more practical issue of how to apply for the IPO of  Manoj Vaibhav Gems ‘N’ Jewellers Ltd.

Investors can apply either through their existing trading account or the ASBA application can be directly logged through the internet banking account. This can only be done through the authorized list of self-certified syndicate banks (SCSB). In an ASBA application, the requisite amount is only blocked at the time of application and the necessary amount is debited only on allotment. Investors can apply in the retail quote (up to ₹2 lakh per application) or in the HNI / NII quota (above ₹2 lakh). Minimum lot sizes will be known after pricing.

Financial highlights of  Manoj Vaibhav Gems ‘N’ Jewellers Ltd

The table below captures the key financials of  Manoj Vaibhav Gems ‘N’ Jewellers Ltd for the last 3 completed financial years.

Data Source: Company RHP filed with SEBI (All ₹ figures are in crores)

There are few key takeaways from the financials of  Manoj Vaibhav Gems ‘N’ Jewellers Ltd which can be enumerated as under

1. In the last 2 years, the revenues growth has been robust yet steady and the same can also be said about the profit growth which is up more than 3 fold in the last 2 years. Purely on the strength of the prospects of the sector, its product catalogue, its strong hold on the southern markets, and the track record, the pricing does look like it has left something on the table for investors.
    
2. The latest year profit margins at over 3.5% are low, but that is the nature of the retail jewellery business. However, ROE above 20% is a fairly attractive ratio support to have. This is a business where a lot of costs get front-ended but once these costs are defrayed, the profits can multiply rapidly in later years. That is the big bet.
    
3. The company has maintained an impressive rate of sweating assets as is evident from the asset turnover ratio. It has consistently averaged above 1.8X, which is a very good sign for a business that is constantly expanding and investing.

While pricing of the IPO does matter here, what is more critical is the eventual PAT margins that will sustain and the ROE that can be held by the company. If you look at the latest year EPS of ₹18.32, the P/E ratio is around 11X earnings, which is quite attractive. The idea lies in seeing how much of the unorganized jewellery market the company can capture in the coming years.