Manoj Vaibhav Gems 'N' Jewellers Limited IPO

About the company:

Manoj Vaibhav Gems ‘N’ Jewellers Limited also known as Vaibhav Jewellers is a leading regional jewellery brand in South India led by a first-generation woman entrepreneur Mrs. Bharata Mallika Ratna Kumari Grandhi along with her daughter Grandhi Sai Keerthana. It is a hyperlocal jewellery retail chain with a presence in the micro markets of Andhra Pradesh & Telangana with 13 showrooms (inclusive of two franchisee showrooms) across 8 towns and 2 cities. They have a market share of ~4% of the overall Andhra Pradesh and Telangana jewellery market and ~10% of the organised market in these two states in FY 2023. The company is one of the earlier entrants in the organised jewellery retail market of Andhra Pradesh and continues to focus on regional expansion into the high-growth untapped regions within the micro-markets of Andhra Pradesh & Telangana thereby creating a market for branded jewellery in its area of operations. In FY 2023, the total market size of Andhra Pradesh and Telangana was USD 3.3 Bn and USD 2.8 Bn respectively. While the Andhra Pradesh jewellery market is expected to grow to USD 6.3 Bn by FY 2027 at a CAGR of ~18%, the Telangana market is expected to grow to USD 5.3 Bn during the same period at a CAGR of ~18%.

The Objective of The Fresh Issue:

The company intends to utilize the net proceeds received from the fresh issue towards
- Capital expenditure and inventory cost for the proposed eight (8) new showrooms.
- General Corporate Purposes.

Key Strengths and Opportunities:

- Vaibhav Jewellers has been amongst the first movers in the organised jewellery business in the state of Andhra Pradesh. Their product range and offering have allowed them to cater to all customer segments and genres, thus augmenting their brand strength and building a loyal customer base. The company’s revenue from operations was Rs. 509 million in 2005 and has now touched approximately Rs. 20,273 million in the year 2023 at a CAGR of 22.71%, thus showcasing exceptional growth in the business over the last two decades.

- The rural market continues to contribute 58% of the jewellery demand in India. Gold ownership is higher in rural India, and rises with income levels. The company follows a hub and spoke model in their respective region of operation with small-sized showrooms operating peripheral to the larger showrooms, thus allowing them to offer new products to the semi-urban and rural customers on a continuous basis as per their demand and choices.

- Vaibhav Jewellers have also created a sub-brand “VISESHA” and the idea of creating this sub-brand is to showcase the design intricacies, along with workmanship and exclusive designs, which are distinctive and appealing to the customers. VISESHA of the Company caters to customers in the premium gold and diamond jewellery segment.

- The company follows the Go To Market (GTM) model, through which they have developed strong connections and built long-lasting relationships with the customers. The GTM model helps in collecting critical market data and has enabled them to undertake in-house research and study of the varied characteristics of the market in which they operate.

Risks:

- The non-availability or high cost of quality gold bullion, silver, diamonds and other precious and semi-precious stones may have an adverse effect on their business, results of operations and financial condition.

- The company has significant working capital requirements and may require additional capital and financing in the future. Their ability to access capital at attractive costs also depends on the credit ratings. The company’s operations could be curtailed if they are unable to obtain the required additional capital and financing when needed.

- Vaibhav Jewellers’ showrooms are spread across the states of Andhra Pradesh and Telangana only. The net proceeds of the Offer will also be utilised by the Company to expand its presence across the states of Andhra Pradesh and Telangana by setting up of proposed 8 new showrooms. Any change in the political scenario, change in economic condition, natural calamity or force majeure event in the states of Andhra Pradesh and Telangana may have a negative impact on the business, sales and results of operations.

- The company’s business depends on its Promoters and senior management and its ability to attract and retain sales personnel. Any attrition rate of the senior management may affect their business growth adversely.

Financial Snapshot: