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Kalyan Jewellers India Limited (KJIL) was incorporated in 1993. The company is one of the largest jewellery companies in India based on revenue as of March 31, 2020. The company was established by their founder and one of their Promoters, T.S. Kalyanaraman.Kalyan Jewellers has expanded to become a pan-India jewellery company, with 107 showrooms located across 21 states and union territories in India, and also has an international presence with 30 showrooms located in the Middle East as of December 31, 2020.

Positives: (a) One of India’s largest jewellery companies with a pan-India presence & strong brand equity (b) Wide range of product offerings targeted at a diverse set of customers; (c) Strong promoter background with extensive experience in retail and jewellery.

Investment concerns: (a) KJIL reported poor consolidated top-line & bottom-line (over FY2018-20), hence growth concerns remain;(b) Slowdown in the economy could impact the overall profitability of the company (Jewellery business is discretionary in nature).

Outlook & Valuation: In terms of valuations, the pre-issue TTM EV/Sales works out to 1.5 (at the upper end of the issue price band), which is low compared to Titan Company (trading at 7.7x). However, Titan company has a better financial track record compared to KJIL. Going forward, we believe that KJIL would perform better on the back of a strong brand and number of stores in India & internationally. Thus, we recommend a subscribe rating on the issue.

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