Vaibhav Jewellers makes a muted debut: Should you buy, hold, or book profit?

Manoj Vaibhav Gems N Jewellers IPO which opened on September 22 and closed on September 26 was subscribed 2.25 times.

Manoj Vaibhav Gems N Jewellers (Vaibhav Jewellers) made a weak debut on bourses on October 3, listing at par with its IPO price of Rs 215. While a few analysts suggested holding the stock for the medium to long term, Shivani Nyati, head of wealth at Swastika Investmart, has advised investors to exit their positions due the high IPO price and competitive jewellery market.

The public issue, which opened on September 22 and closed on September 26, was subscribed 2.25 times. High net-worth individuals led the support to the offer, subscribing for 5.18 times the allotted quota, while the issue received muted response from qualified institutional buyers, and retail investors as they bought 1.06 times and 1.66 times the reserved portion respectively. At 2pm, the stock jumped 2.63 percent to Rs 220.65 on the NSE.

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Now, the question stands whether you should buy the stock, or sell whatever you have bought so far, or simply hold it for now. Let's check out what experts say.  

Investors may exit their positions: Swastika Investmart

The Manoj Vaibhav Gems and Jewels IPO received a muted response, and it was subscribed to only 2.25 times. “This could be due to a number of factors, including the high IPO price, the company's relatively small size, and the competitive jewellery market. Overall, the listing of Manoj Vaibhav Gems and Jewels was in line with expectations,” Shivani Nyati said.

She further advised investors who have received allotments in the IPO to consider exiting their position.

Hold for long-term: Hem Securities

“We recommend holding for the long term as the company is a key leading home-grown regional brand built on a hyperlocal retail strategy. The company has an early mover advantage in the state of Andhra Pradesh & has been slowly moving towards capturing and expanding over brand in Tier II and Tier III cities,” said Astha Jain, Senior Research Analyst at Hem Securities.

Hold stock for medium to long term: StoxBox

Manoj Vaibhav Gems N Jewellers has displayed steady growth in revenue and even more robust profit growth which is up more than three-fold in two years, according to Dhruv Mudaraddi, Research Analyst at StoxBox. MVGJL also boasts of a 23 percent return on its equity in FY23 which is attractive compared to its already listed peers. They plan to open eight new stores to target more Tier 2 and Tier 3 markets which augurs well as rural markets contributed 50-52 percent of the total jewellery market in FY23.

“Based on the prospects of the sector, the company’s product catalogue, its stronghold in the southern markets and a good track record, we remain positive on the company and recommend investors who have received allotment to hold the stock from a medium to long term perspective,” Mudaraddi said.

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