Ahmedabad-based RBZ Jewellers is gearing up for its market debut on December 26. However, preliminary signals from the grey market hint at modest listing gains for the company, as the stock holds a premium of INR 5. This suggests a nominal 5 percent increase upon listing.
The firm’s initial public offering (IPO) attracted significant attention from investors, recording a subscription rate of 16.86. Retail investors displayed the highest enthusiasm, oversubscribing their allocated quota by 24.74 times. High net-worth individuals subscribed 9.27 times the reserved portion, while qualified institutional buyers opted for 13.43 times their allocated shares.
The firm’s initial public offering (IPO) attracted significant attention from investors, recording a subscription rate of 16.86. Retail investors displayed the highest enthusiasm, oversubscribing their allocated quota by 24.74 times. High net-worth individuals subscribed 9.27 times the reserved portion, while qualified institutional buyers opted for 13.43 times their allocated shares.
“We expect a decent listing for RBZ Jewellers’ issue. We anticipate the IPO to open at a premium of around 5 percent to the issue price of Rs 100 apiece,” said Prathamesh Masdekar, Research Analyst at StoxBox.
Masdekar emphasized the firm’s clientele in the wholesale sector, encompassing esteemed national, regional, and local family jewellers spanning 20 states and 72 cities in India. He commends the company’s distinctive approach in its business model, exercising full control over the entire value chain.
Furthermore, Masdekar advises investors who have been allotted shares to retain them with a medium to long-term perspective.
Nevertheless, apprehensions regarding the company’s limited disclosure to credit rating agencies such as Brickwork and CRISIL in recent years underscore governance issues. These concerns may have also impacted the demand the company experienced in the grey market.
Regarding financials, the company achieved a 55 percent year-on-year surge in net profit, reaching INR 22.33 crore for the fiscal year 2023, supported by robust operational performance.
During the corresponding period, the revenue reached INR 288 crore, marking a 14.2 percent increase from the preceding fiscal year. Simultaneously, the EBITDA experienced a significant rise, surging by 41 percent to INR 37.8 crore. The operating margin also saw a substantial expansion, increasing by 249 basis points on a yearly basis to 13.11 percent in the same period.
The net profit for the initial six months concluding in September of FY24 amounted to INR 12.09 crore, with revenue totaling INR 125.5 crore.
Narendra Solanki, the head of fundamental research at Anand Rathi Shares and Stock Brokers, is of the opinion that at the higher end of its price range, which is INR 95-100, the company is reasonably valued with a price-to-earnings (P/E) ratio of 17.9X and a market capitalization of INR 400 crore post its listing.
Nevertheless, amid existing concerns, Solanki also recommends that investors retain their allocated shares in the company based on their risk appetite.
The jewellery manufacturer intends to utilise the new funds primarily to meet working capital needs amounting to INR 80.75 crore. The residual funds will be allocated for general corporate purposes, not exceeding 25 percent of the gross proceeds.
