Kolkata-based jewellery retailer Senco Gold will be the first initial public offering (IPO) opening for subscription in the second half of the current calendar year.
Here are 10 important aspects to know before subscribing:
1) IPO Dates
The public issue will open on July 4 and close on July 6. The anchor book opened for investors for bidding for a day on July 3.
2) Price Band
The price band for the offer has been fixed at Rs 301-317 per share. The company has sought a market capitalisation of Rs 2,351-2,462 crore at the said price band range.
3) Issue Size
The company is planning to mop up Rs 405 crore via its maiden public issue. The offering comprises a fresh issuance of shares worth Rs 270 crore and an offer-for-sale (OFS) of Rs 135 crore by investor SAIF Partners India IV.
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4) Objectives of Issue
The OFS money will go to the selling shareholder, SAIF Partners, while the fresh issue money will mainly be used for meeting the working capital requirements of the company (Rs 196 crore), besides for general corporate purposes.
5) Lot Size
Investors can bid for a minimum of 47 equity shares and in multiples of 47 shares thereafter, which means the minimum investment by retail investors in the issue would be Rs 14,899 per lot, while the maximum would be Rs 1,93,687 for 13 lots as their investment cannot exceed Rs 2 lakh.
High networth individuals (HNIs), who are allowed to invest more than Rs 2 lakh and up to Rs 10 lakh, can bid for a minimum of Rs 2,08,586 worth of shares (14 lots), while the maximum investment would be Rs 9,98,233 for 67 lots. The minimum investment by HNIs who are allowed to invest more than Rs 10 lakh would be Rs 10,13,132 for 68 lots.
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Half of the issue size is reserved for qualified institutional buyers (QIBs), 15 percent for HNIs (non-institutional investors) and the rest 35 percent for retail investors. Of the QIB, 60 percent is reserved for anchor investors.
6) Company Profile
Senco Gold is the largest organised jewellery retail player in the eastern region of India based on the number of stores. It primarily sells gold and diamond jewellery, apart from jewellery made of silver, platinum and precious and semi-precious stones. It has a team of 20 designers and 170 experienced karigars.
Senco sells its products under the brand Senco Gold & Diamonds through multiple channels, including its owned 75 showrooms and 61 franchisee showrooms as of March 2023. About 63 percent of its showrooms are in West Bengal.
7) Financials
Senco, with a track record of more than five decades in the jewellery business, has recorded a nearly 23 percent increase in consolidated profit for FY22 at Rs 158.5 crore on revenue of Rs 4,077.4 crore, which grew by 15.35 percent compared to the previous year. The profitability was supported by topline and other income but restricted by flat operating margin. The net profit margin has grown to 3.9 percent in FY23, from 3.7 percent in FY22.
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On the operating front, earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by 14.2 percent to Rs 316.6 crore and the operating margin came in at 7.76 percent for FY23 against 7.84 percent in the previous year.
The borrowings on its books have increased significantly to Rs 1,177.2 crore in FY23, rising from Rs 863 crore in FY22 and Rs 532.4 crore in FY21. As a result, the finance cost has also been increasing, which may be a bit of a concern.
The price-to-earnings (PE) stood at 15.5 on FY23 earnings, which is better than the 82.7 of Titan Company, 33.8 of Kalyan Jewellers and 25.7 of Thangamayil Jewellery.
8) Promoters
Suvankar Sen & his family and their trusts (Jai Hanuman Shri Siddhivinayak Trust and Om Gaan Ganpataye Bajrangbali Trust) are the promoters of the company, owning 76.92 percent shareholding in the company.
The rest of the stake is held by investors SAIF Partners India IV (17.20 percent) and Oman India Joint Investment Fund II (OIJIF II, 3.85 percent), which invested in the company in 2014 and 2022, respectively.
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Ranjana Sen, mother of Suvankar, is Chairperson and Whole-Time Director on the board, while Suvankar Sen is the Managing Director (MD) and Chief Executive Officer (CEO) and his wife Joita Sen is a Whole-Time Director on the board.
Vivek Kumar Mathur (a non-Executive Nominee Director) from SAIF Partners PE is on the board of Senco.
Sanjay Banka is the Chief Financial Officer (CFO) of the company, and Surendra Gupta is the Company Secretary & Compliance Officer.
9) Risks and Concerns
Here are key risks and concerns highlighted by SBI Securities:
a) The company operates in a highly competitive and fragmented market, as the players in the Indian retail jewellery sector often offer their products at highly competitive rates and many of them are well-established in their local markets.
b) Senco requires a significant amount of working capital, primarily to finance the purchase of raw materials and to drive growth. As of March 2023, the company had a total working capital sanction limit of Rs 2,073 crore.
c) Its business depends on its ability to attract and retain skilled designers, karigars, craftsmen and sales personnel, as the level and quality of sales personnel and customer service are key competitive factors in the jewellery retail industry.
d) Though an increase in the price of gold may result in an increase in income from inventory held for sales, a significant increase in the price of gold or a negative outlook on future gold prices could adversely affect the company’s sales volumes in the short term.
10) Listing Dates and GMP
The finalisation of the allotment basis will take place by July 11. The equity shares will be credited to the demat accounts of eligible investors by July 13, while the refunds will be credited to the bank accounts of unsuccessful investors by July 12.
Senco Gold will make its debut on the BSE and NSE on July 14.
Its IPO shares traded at around a 20 percent premium in the grey market over the upper price band of Rs 317 per share, analysts on condition of anonymity said. The grey market is an unofficial platform for trading in IPO shares and investors generally consider the grey market premium for the listing of any IPO.
IIFL Securities, Ambit, and SBI Capital Markets are the merchant bankers on the issue. Kfin Technologies is the registrar of the offer.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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