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Last Updated : Aug 01, 2020 07:09 AM IST | Source: Moneycontrol.com

Warburg Pincus-backed Kalyan Jewellers revives IPO plans, may file for Rs 1,600-1,800 crore offer by August-end

The company has started work on the IPO and is likely to file its DRHP with SEBI by August-end or early September


Kalyan Jewellers, the leading Kerala-based jewellery retail firm backed by private equity giant Warburg Pincus, has revived plans to debut on Dalal Street by launching a Rs 1,800 crore initial public offering (IPO).

The company has started work on the IPO and is likely to file its DRHP (draft red herring prospectus) with market regulator SEBI by August-end or early September, people familiar with the matter told Moneycontrol. The decision comes on the back of a gradual recovery in demand in the domestic jewellery sector after the pounding from the COVID-19 outbreak.

The IPO hiatus in the markets due to the coronavirus lockdown ended on July 23 when speciality chemicals firm Rossary Biotech made a blockbuster stock market debut.

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“Kalyan Jewellers is looking to raise around Rs 1,600-Rs 1,800 crore through a mix of primary and secondary issue of shares. Their numbers as of March are healthy. With the organised jewellery sector slowly heading towards normalcy, this has given confidence to the firm,” one of the persons cited above told Moneycontrol. The firm had evaluated an IPO in early 2018 but deferred those plans.

“Axis Capital, Citi, ICICI Securities and SBI Capital are the investment banks working on the IPO for Kalyan Jewellers. The listing will provide a partial exit to Warburg Pincus and will also facilitate debt reduction,” a second person said.

A third person said January to March 2021 would be an ideal window to launch the Kalyan Jewellers IPO after securing the requisite approvals. "If the plans fructify and are successful, it could enthuse peers like Joyallukas and Malabar Jewellers to evaluate the listing route.”

All the three individuals spoke to Moneycontrol on the condition of anonymity. Moneycontrol has sent reminders and is awaiting an email response from Kalyan Jewellers. Warburg Pincus and Citi declined to comment and Moneycontrol is awaiting replies from Axis Capital, ICICI Securities and SBI Capital.

Kalyan Jewellers: Prospects shinier now?

Warburg Pincus has collectively invested around Rs 1,700 crore in two tranches in Kalyan Jewellers in lieu of an undisclosed minority stake. Its initial investment of Rs 1,200 crore in 2014 was the biggest private equity investment ever in the jewellery sector in India, followed by a second smaller round of Rs 500 crore in 2017.

According to a report released by rating agency ICRA in September 2019, Warburg Pincus has a 30 percent stake in the jewellery firm. Kalyan Jewellers had an operating income of Rs 7,454 crore and a profit after tax (PAT) of Rs 50 crore in FY19, the report said.

Kalyan Jewellers has over 135 showrooms across 19 states and two Union Territories and also has an online brand called ‘Candere by Kalyan Jewellers’. The firm is present in five countries, including the Middle East region, and has over 750 ‘My Kalyan’ stores in India, which function as customer touch points and feeders to the showrooms.

Gold prices have hit record highs in recent weeks due to a spike in demand for safe assests on the back of a weaker dollar and rising COVID-19 cases.

The top five stocks in the gems and jewellery sector, based on market capitalisation (with the exception of Rajesh Exports), have surged sharply since the beginning of the nationwide lockdown.

Key Jewellery stocks during lockdown - Ritesh chart

This signals a slow restoration to pre COVID-19 levels in terms of demand, footfalls and sales. The likes of Vaibhav Global, PC Jewellers, Renaissance Global and Titan have seen their stock prices rising by 105 percent, 84 percent, 40 percent and 27 percent, respectively.

Recently, due to the COVID-19 pandemic, the government extended the deadline for mandatory hallmarking of gold jewellery and artefacts by four months till June 1, 2021. Hallmarking is a purity certification and will introduce standardisation in the market. Jewellers have been given time by the government to shift to hallmarking and register themselves with the Bureau of Indian Standards.
First Published on Jul 31, 2020 10:13 pm
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