Kolkata-based jewellery retailer Senco Gold is expected to glitter with opening gains of around 35-40 percent on July 14, due to robust subscription demand for the IPO, strong brand name with asset-light franchise business model and five decades of experience in the industry.
On top of that, favourable equity market conditions in current financial year is also one of key reasons behind strong listing expectations. The benchmark indices have rallied 15 percent from March lows.
The Rs 405-crore public issue of Senco Gold had seen more than 73 times subscription during July 4-6. Qualified institutional buyers have taken a lead amongst participants, subscribing 181 times the allotted quota, while the part set aside for high networth individuals was booked 65 times. Retail investors also looked aggressive, bidding 15.5 times the reserved portion.
Having a leadership position in organised jewellery market in Eastern India, Senco Gold owns extensive retail network of 136 showrooms, of which 75 is owned by the company and 61 are operated via franchise model, in 96 cities. Around 63 percent of its showrooms are located in West Bengal.
Specialising in the sale of gold and diamonds, the company also offers an extensive selection of jewellery crafted from silver, platinum, precious and semi-precious stones, and various other metals.
"We expect the share price to list around Rs 450, which is a premium of 42 percent over the issue price of Rs 317 per share," said Manish Chowdhury, head of research at StoxBox.
Click Here To Know Latest Subscription Numbers of Utkarsh SFB IPO
Manish remains positive on the company from a long-term perspective as its omni-channel approach would result in efficient capital allocation. Moreover, its leadership position in organized jewellery retail in eastern India along with its focus to expand on a pan-India basis bodes well for the growth prospects, he believes.
Astha Jain, senior research analyst at Hem Securities and Prashanth Tapse, Research Analyst, Senior VP Research at Mehta Equities are expecting Senco Gold to list at 35-40 percent premium, citing the strong brand name with heritage and a legacy of over five decades.
Astha also likes the business model of company & growth rate at which company has grown its topline & bottomline over the period of time. Also, looking after the peer comparison, she finds valuations reasonable too.
The jewellery retailer has recorded revenue growth at a CAGR of 24 percent during FY21-FY23, which stood at Rs 4,077 crore in FY23, while profit at Rs 158.5 crore grew at a CAGR of 61 percent during the same period.
Click Here For All IPO News
At the upper end of issue price band of Rs 301-317 per share, it is available at a 15.5x P/E on FY23 basis against peers Titan at 83.5x and Kalyan Jewellers India 35x, with a market capitalisation of Rs 2,462 crore.
In the grey market, which is an unofficial market wherein the IPO shares can be bought and sold till the listing on the bourses, Senco Gold traded with a massive 41 percent premium over issue price of Rs 317 per share, analysts said on anonymity.
"The grey market premium is justified by the strong demand for the IPO, which was subscribed 73 times. The company has also been growing its business steadily in recent years and is well-positioned to benefit from the growing demand for gold jewellery in India," Anubhuti Mishra, Equity Research Analyst at Swastika Investmart said.
The public issue of Senco Gold comprised a fresh issue of Rs 270 crore and an offer for sale of Rs 135 crore by investor SAIF Partners India IV. The fresh issue proceeds will mainly be utilised for working capital requirements.
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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
