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About the Company

Incorporated in 1993, Kalyan Jewellers India Ltd is one of the largest jewellery companies in India. They design, manufacture and sell a wide range of gold (~75% of revenue), studded and other jewellery products (~25% of revenue). The company started operations with a single showroom in Thrissur, Kerala and they expanded to become a pan-India company over the years, with 107 showrooms located across 21 states and union territories in India. Also, they have an international presence with 30 showrooms located in the Middle East. Additionally, the company sells its products through its online platform at www.candere.com.

Objects of the Issue

* Funding working capital requirements of the company

* General corporate purposes

Valuation

Historically, the unorganized players have dominated the Indian jewellery industry however with more organized players entering the segment the share of unorganized is declining and this will continue in the future as well, largely driven by the shift in demand in favour of organized jewellers as these companies offer guaranteed gold purity, availability of varieties of products and changing consumers preference towards brands and sophisticated pieces of jewellery.

Kalyan Jewellers is well placed to capitalize on these opportunities, driven by its strong brand, scalable business model, effective operational processes and proven track record of profitable expansion.

Further, its ‘Hyperlocal’ strategy and ‘My Kalyan’ network supports in maintaining transparency, building customers trust as well as reach more customers and new geographies. According to the Technopak report, a significant proportion of India’s gold jewellery demand originates from rural and semi-urban markets, where the penetration of organized jewellery companies has been lower.

We believe players like Kalyan Jewellers have a good opportunity to expand in these markets and gain market share as it has a strong product portfolio and they use local artisans as contract manufacturers to aligns with local tastes, which would cater to rising demand. Also, its ‘My Kalyan’ network which focuses on marketing and customer engagement in these areas would further support growth.

Going forward, the company plans to increase focus on high margin business like studded jewellery, innovate new designs in gold, expand showroom network and strengthen customer reach will bode well for the growth. On the valuation front, the company is valued at 51x FY20 EPS. We have a positive view on Kalyan Jewellers and investors can Subscribe for the long term.

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