Please refer to important disclosures at the end of this report
1
Kalyan J
ewellers India Limited (
K
J
I
L
1993. The company is
one of the largest jewellery companies in India based on revenue as of
March
31, 2020. The company was established by their
founder and one of their
Promoters, T.S. Kalyanaraman.Kalyan Jewellers has expanded to become
a
pan-India jewellery company, with 107 showrooms located across 21 states
and
union territories in India, an
d also has an international presence with 30
showrooms located in the Middle East as of December 31, 2020.
Positives: (a) One of India’s largest jewellery companies with a pan-
India
presence & strong brand equity (b)
Wide range of product offerings targeted at
a diverse set of customers; (c)
Strong promoter background with extensive
experience in retail and jewellery.
Investment concerns: (a) KJIL reported poor consolidated top-line & bottom-
line
(over FY2018-20), hence growth concerns remain;(b)
Slowdown in the economy
could impact the overall profitability of the company (Jewellery business is
discretionary in nature).
Outlook & Valuation: In terms of valuations, the pre-iss
ue 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 KJIL. Going for
ward, we believe that KJIL would
perform better on the back of a strong brand and number of stores in India &
internationally. Thus, we recommend a subscribe rating on the issue.
Key Financials
Y/E March (Rs cr) FY2018 FY2019 FY2020
9MFY21
Net Sales
10,526
9,771
10,101
5,517
% chg
-
(7.2)
3.4
Net Profit
143
(4)
142
(80)
% chg
-
NA NA
OPM (%)
7.3
6.3
7.9
6.6
EPS (Rs)
1.7
(0.1)
1.7
(1.0)
P/E (x)
51.8
NA
51.3
-
P/BV (x)
4.1
4.1
3.8
-
RoE (%)
7.2
(0.2)
6.6
-
RoCE (%)
9.5
6.8
9.7
-
EV/Sales (x)
1.1
1.1
1.1
-
EV/EBITDA (x)
14.5
18.0
13.8
-
Angel Research; Note: Valuation ratios based on pre-issue outstanding shares and at upper end
of the price band
Subscribe
Issue Open: March 16, 2021
Issue Close: March 18, 2021
Offer for Sale:
`
375cr
QIBs 50%
Non-Institutional 15%
Retail 35%
Promoters 60.5%
Others 39.5%
Fresh issue:
`800
cr
Issue Details
Face Value:
`10
Present Eq. Paid up Capital: `938cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `1,030cr
Issue size (amount):
`1,175
Price Band: `86-87
Lot Size: 172 shares and in multiple thereafter
Post-issue mkt.cap: *
`8868
–**8961cr
Promoters holding Pre-Issue: 68.0%
Promoters holding Post-Issue: 60.5%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Amarjeet S Maurya
+022 39357600, Extn: 6831
amarjeet.maurya@angelbroking.com
Kalyan Jewellers India Ltd
IPO Note |
Retail
March 15
, 2021
Kalyan Jewellers India Ltd | IPO Note
March 15, 2021
2
Company background
Kalyan Jewellers is one of India's largest Jewellery companies. The key business
activities of the company is to design, manufacture, and sell a variety of gold,
studded and other jewellery products for various occasions i.e. wedding, festivals,
etc.
Initially, the company was started with a single showroom in Kerala, and over the
years, it has expanded its presence with 107 showrooms located across 21 states
and union territories in India. It not just serves the domestic market but also serves
overseas customers with 30 showrooms located in the Middle East. The company
generates a significant portion of revenues from gold jewellery, accounted for ~75%
in fiscal 2020 followed by studded (diamond and precious stone) and other jewellery
segments.
Issue details
KJIL is raising `1,175cr through fresh issue (`800cr) and Promoter & Individual
investors are selling equity worth `375cr
through offer for sale in the price band of
`86-87.
Exhibit 1: Pre and post IPO shareholding pattern
No of shares (Pre-issue) % No of shares (Post-issue) %
Promoters
637,823,614 68.0 623,455,798 60.5
Others 300,275,421 32.0 406,597,260 39.5
Total 938,099,035 100.0
1030,053,058 100.0
Source: Source: RHP, Note: Calculated on upper price band
Objectives of the Offer
To finance business working capital requirements.
To meet general corporate purposes.
Kalyan Jewellers India Ltd | IPO Note
March 15, 2021
3
Exhibit 2: Consolidated Income Statement
Y/E March (` cr) FY2018
FY2019
FY2020
Net Sales
10,526
9,771
10,101
% chg (7.2
)
3.4
Total Expenditure
9,752
9,152
9,302
Raw Material
8,802
8,198
8,392
Personnel
369
381
357
Others Expenses
582
572
553
EBITDA
774
619
799
% chg
(20.0)
29.1
(% of Net Sales)
7.3
6.3
7.9
Depreciation& Amortisation
202
224
239
EBIT
572
396
560
% chg
(30.8)
41.6
(% of Net Sales)
5.4
4.0
5.5
Interest & other Charges
390
418
419
Other Income
32
43
80
(% of PBT)
15.1
206.7
36.3
Recurring PBT
214
21
221
% chg
(90.2)
955.4
Tax
73
26
79
(% of PBT)
34.1
123.2
35.6
PAT (reported)
141
(5)
142
% chg
-
-
(% of Net Sales)
1.4
(0.0)
1.4
Basic EPS (`)
1.7
(0.1)
1.7
% chg
-
-
Source: Company, Angel Research
Kalyan Jewellers India Ltd | IPO Note
March 15, 2021
4
Consolidated Balance Sheet
Y/E March (` cr)
FY2018
FY2019
FY2020
SOURCES OF FUNDS
Equity Share Capital
958
958
958
Reserves& Surplus
1,012
1,046
1,203
Shareholders Funds
1,970
2,004
2,161
Total Loans
4,077
3,788
3,640
Deferred Tax Liability
34
23
42
Total Liabilities
6,079
5,812
5,840
APPLICATION OF FUNDS
Gross Block
2,249
2,650
2,777
Less: Acc. Depreciation
370
498
610
Net Block
1,879
2,152
2,167
Capital Work-in-Progress
18
22
24
Investments
1
3
-
Current Assets
6,611
5,853
6,019
Inventories
5,022
4,501
4,720
Sundry Debtors
182
147
214
Cash
1,018
825
750
Loans & Advances
249
240
214
Other Assets
140
141
121
Current liabilities
2,506
2,271
2,420
Net Current Assets
4,105
3,582
3,599
Deferred Tax Asset
77
53
50
Mis. Exp. not written off
-
-
-
Total Assets
6,079
5,812
5,840
Source: Company, Angel Research
Kalyan Jewellers India Ltd | IPO Note
March 15, 2021
5
Consolidated Cash Flow Statement
Y/E March (Rs cr)
FY2018
FY2019
FY2020
Profit before tax
214
21
221
Depreciation
202
224
239
Change in Working Capital
396
(141) (424)
Interest / Dividend (Net)
309
328
333
Direct taxes paid
(14)
(39)
(7)
Others
(64)
(3)
(43)
Cash Flow from Operations
1043
389
320
(Inc.)/ Dec. in Fixed Assets
(284) (293) (108)
(Inc.)/ Dec. in Investments
(331)
169
142
Cash Flow from Investing
(615) (124)
34
Issue of Equity
0
0
0
Inc./(Dec.) in loans
(692)
(9)
(72)
Dividend Paid (Incl. Tax)
0
0
0
Interest / Dividend (Net)
242
(284) (271)
Cash Flow from Financing
(450) (293) (343)
Inc./(Dec.) in Cash
(22)
(28)
11
Opening Cash balances
200
178
150
Closing Cash balances
178
150
161
Source: Company, Angel Research
Kalyan Jewellers India Ltd | IPO Note
March 15, 2021
6
Key Ratios
Y/E March FY2018
FY2019 FY2020
Valuation Ratio (x)
P/E (on FDEPS) 51.8
NA
51.3
P/CEPS 21.3
33.4
19.1
P/BV 4.1
4.1 3.8
EV/Sales 1.1
1.1 1.1
EV/EBITDA 14.5
18.0
13.8
EV / Total Assets 1.8
1.9 1.9
Per Share Data (Rs)
EPS (Basic) 1.7
(0.1) 1.7
EPS (fully diluted) 1.7
(0.1) 1.7
Cash EPS 4.1
2.6 4.5
DPS 0.0
0.0 0.0
Book Value 21.0
21.4
23.0
Returns (%)
ROCE 9.5
6.8 9.7
Angel ROIC (Pre-tax) 11.4
8.0
11.1
ROE 7.2
(0.2) 6.6
Turnover ratios (x)
Asset Turnover (Gross Block) 4.7
3.7 3.6
Inventory / Sales (days) 174
168
171
Receivables (days) 6
5 8
Payables (days) 26
16
20
Working capital cycle (ex-cash) (days) 154
158
158
Source: Company, Angel Research
Kalyan Jewellers India Ltd | IPO Note
March 15, 2021
7
Research Team Tel: 022
-
39357800
E
-
mail: research@angelbroking.
com Website:
www.angelbroking.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and Portfolio
Manager and investment advisor with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources
believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for
general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss
or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited
has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any
representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking
Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or
other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.