Kalyan Jewellers initial public offer (IPO) was subscribed 1.21 times on the second day of issue on March 17. The IPO, which concludes today, received bids for 11.56 crore equity shares against the offer size of 9.57 crore equity shares, data available on the exchanges showed.
Retail investors submitted bids 1.90 times the reserved portion, while that of non-institutional investors was subscribed 89%. Employees portion was booked 1.91 times. The reserved portion for qualified institutional buyers was subscribed 24%. The offer also includes a reservation aggregating up to Rs 2 crore for subscription by eligible employees.
Meanwhile, grey market premium (GMP) for Kalyan Jewellers stock was trading at Rs 9 to Rs 10 per share. The IPO has a price band of Rs 86 to Rs 87 per equity share. That means the firm is likely to get listed at Rs 100 per share on March 26. Half of the issue is reserved for qualified institutional buyers, 35 per cent for retail investors and 15 per cent for non-institutional bidders.
The issue comprises equity shares aggregating up to Rs 1,175 crore, including fresh equity aggregating up to Rs 800 crore and an offer for sale (OFS) worth Rs 375 crore. On March 15, Kalyan Jewellers raised Rs 351.89 crore from anchor investors. Total 4.04 crore shares at Rs 87 per share were allocated to 15 anchor investors.
Kalyan Jewellers' promoter TS Kalyanaraman will offload equity shares aggregating up to Rs 1,25 crore and Highdell Investment Ltd, an affiliate of Warburg Pincus, would sell up to Rs 250 crore worth of shares through the OFS route. Bids can be made for a minimum of 172 equity shares and in multiples of 172 equity shares thereafter.
Axis Capital Limited, Citigroup Global Markets India Private Limited, ICICI Securities Limited and SBI Capital Markets Limited are the global co-ordinators and book running lead managers to the IPO offer. BOB Capital Markets is the book running lead manager to the IPO offer.
Amarjeet Maurya - AVP - Mid Caps, Angel Broking is positive on the IPO. "In terms of valuations, the pre-issue TTM EV/Sales works out to 1.5 which is low compared to Titan Company (trading at 7.7x). 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," Maurya said.
However, Choice Broking in a report recommended avoiding the share sale.
"At higher price band of Rs. 87, the company is demanding a TTM P/S valuation of 1.2x, which is at a significant premium to the peer average of 0.4x (excluding Titan Company Ltd.). Thus considering the above observations we assign an "AVOID" rating for the issue," the brokergae said.
Brokerage Geojit has assigned a subscribe call to the issue.
"At the upper price band of Rs 87, the pricing is on the higher side, but on a long-term basis, Kalyan jewellers is available at one-year forward estimated P/E of 25x (on FY23E basis). Given forecasted improvement in profitability and balance sheet, India's appetite for gold, strong pan India presence, brand recall and diversified product offering, we assign a "Subscribe" rating on a long-term basis," the brokerage said in a report.