Rajasthan-based Motisons Jewellers is likely to start the first day of trade with more than 100 percent premium on December 26. The robust IPO subscription numbers, strong financial performance in the past three years and positive market conditions seem to be supporting the expected listing gains for tomorrow.
The grey market investors also seem to be bullish on the jewellery retailer as they have given a premium in the range of 100-140 percent over the issue price of Rs 55 per share, analysts on anonymity said.
The Rs 151-crore public issue bought 159.61 times during December 18-20 as all categories of investors showed strong participation in the IPO. The high networth individuals picked 233.91 times the alloted quota, qualified institutional buyers 157.40 times and retail investors 122.28 times.
In fact, its subscription numbers were much better than two jewellery companies launched IPOs - Senco Gold and Vaibhav Jewellers - in the current year.
"We expect the stock to list at a premium of around 135 percent to the issue price of Rs 55 per share," Prathamesh Masdekar, research analyst at StoxBox said.
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He believes the company’s well-established business that seamlessly blends heritage with market sensitivity, a vast product portfolio which caters to diverse market segments and strategically located showrooms that contribute to enhanced revenue per square feet position it strongly in the market.
The Jaipur-based Chhabra family-owned jewellery retail company has demonstrated robust revenue growth over the last three years, with a notable doubling of net profit in the past two years.
Net profit in the year ended March FY23 jumped 50.5 percent to Rs 22.2 crore and revenue surged 16.5 percent to Rs 366.2 crore compared to previous year. EBITDA increased 26.9 percent YoY to Rs 49 crore with margin expansion of 109 bps at 13.37 percent.
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On the basis of CAGR, the profit grew by 51 percent during FY21-FY23, revenue 31 percent and EBITDA 26 percent. Its profit in the first quarter ended June FY24 stood at Rs 5.5 crore on revenue of Rs 86.7 crore.
At the upper price band of Rs 55, the IPO is priced at 24.4x FY23 PE, which is 24 percent discount to its industry peers. "The company has a healthy operating margin versus peers albeit is weak in parameters like inventory days, working capital days and leverage ratios. Motisons underperformances the industry average. Additionally, partial repayment of debt is a key positive for the company," Saral Seth and Jainam Shah of Indsec Securities said.
Motisons Jewellers that started its jewellery business in 1997 with a single showroom in Jaipur and later expanded network to 4 showrooms under the Motisons brand has raised Rs 151.09 crore via public issue which comprised only a fresh issue component.
The company will utilise net fresh issue proceeds for repaying its debt (Rs 58 crore) and working capital requirements (Rs 71 crore), besides general corporate purposes. Its total borrowings stood at Rs 166 crore as of June FY24.
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