Manoj Vaibhav Gems IPO Review – Is the IPO attractively priced?

Manoj Vaibhav Gems ‘N’ Jewellers Limited is gearing up for its Initial Public Offering (IPO), scheduled to open for subscription on September 22, 2023. This IPO has attracted significant attention from investors. In this comprehensive article, we will provide you with an in-depth overview of the Manoj Vaibhav Gems IPO which includes key dates, company information, potential strengths, and risks which would help investors to take decision whether to invest or not.

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Manoj Vaibhav Gems IPO Details

IPO Opening Date 22-Sep-23
IPO Closing Date 26-Sep-23
IPO Listing Date 06-Oct-23
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 204 to Rs 215 per equity share
Lot Size 69 Shares
Listing at BSE and NSE
Total Issue Size Rs. 270.2 Crores
    Fresh issue     Rs. 210 Crores
    OFS     Rs. 60.2 Crores

IPO Time Table

IPO Opens on 22-Sep-23
IPO Closes on 26-Sep-23
Basis of Allotment 03-Oct-23
Initiation of Refunds 04-Oct-23
Credit of Shares to Demat 05-Oct-23
Listing Date 06-Oct-23
Cut-off time for UPI mandate confirmation 26-Sep-23

About Manoj Vaibhav Gems ‘N’ Jewellers Limited

Founded in 2003, Manoj Vaibhav Gems ‘N’ Jewellers Limited, also known as Vaibhav Jewellers, has firmly established itself as a prominent regional jewelry brand in South India.

  • The company offers a diverse range of jewelry, including gold, silver, diamond jewelry, precious gemstones, and more. These products are available through their retail showrooms as well as their online platform.
  • Vaibhav Jewellers caters to various economic segments across micro markets in Andhra Pradesh and Telangana through its retail showrooms, with a strong presence in both rural and urban markets.
  • Presently, the company operates 13 showrooms, including two franchisee showrooms, spread across 8 towns and 2 cities in Andhra Pradesh & Telangana.

Financial Snapshot of Manoj Vaibhav Gems ‘N’ Jewellers Limited

Financial Year ending / Period ending (Amt in Crores)
Particulars FY20 FY21 FY22 FY23
Assets 818.62 803.10 899.53 1,077.86
Revenue 1284.3 1,443.18 1,697.70 2,031.30
Profit After Tax 24.39 20.74 43.68 71.60
Net Worth 208.08 228.99 272.86 344.55
Reserves and Surplus 198.31 219.22 263.09 305.47
Total Borrowing 419.32 463.43 477.73 460.00

Object of the Issue

Manoj Vaibhav Gems IPO size is Rs 270.2 Crores which contains both OFS of Rs 60.2 Crores and fresh issue of Rs 210 Crores.

1) In OFS the amount goes to selling share holders and company would not get anything.

2) Under fresh issue, the net proceeds will be allocated to the following objectives:

  • To Finance the Establishment of the proposed 8 new showrooms, i.e.
    • Capital expenditure cost for the proposed eight (8) new showrooms,
    • Inventory cost for the proposed eight (8) new showrooms,
  • General corporate purposes.

Valuation of this IPO

Manoj Vaibhav Gems IPO price band is Rs 204 to 215 per share

  • If we consider last year FY23 EPS of Rs 18.32, P/E ratio works out to be 12x.
  • If we consider last 3 years weighted EPS of Rs 13.77, P/E ratio works out to be 16x.
  • The listed peers like Titan trading at P/E 92x (Highest) and Tribhovandas Bhimji Zaveri is trading at P/E of 15x (Lowest) and industry average P/E is 30x. Hence, the IPO Price band at P/E of 12x to 16x is attractively priced.

Manoj Vaibhav Gems IPO GMP (Grey Market Premium)

We searched various sources and could not find any trades happening offline to ascertain grey market premium of Manoj Vaibhav IPO.

Positive Factors in Manoj Vaibhav Gems IPO

Investors should also take into account the following positive factors when considering this IPO.

  • Hyperlocal Retail Strategy: The company has built a strong regional brand with a hyperlocal retail strategy, making it a key player in the South Indian jewelry market.
  • Early Mover Advantage: Manoj Vaibhav Gems ‘N’ Jewellers had the advantage of being an early mover in the state of Andhra Pradesh, establishing a strong presence in the region.
  • Rural Market Focus: The company’s focus on both rural and urban markets sets it apart, catering to a wide range of economic segments.
  • Diverse Product Range: Offering gold, silver, diamond jewelry, precious gemstones, and more, the company provides a diverse product range to cater to customers across various budget brackets.
  • Customer-Centric Approach: With its ethos of ‘Relationships, by Design,’ the company emphasizes high-quality products, transparency, and excellent customer service, fostering customer loyalty.
  • Effective Go-To-Market Strategy: Manoj Vaibhav Gems ‘N’ Jewellers’ go-to-market strategy has enabled it to connect with a broader customer base, fostering strong customer relationships.
  • Experienced Leadership: The company boasts an experienced promoter and professional senior management team, ensuring effective strategy implementation and smooth business operations.
  • Brand Ambassadors: Both employees and customers are seen as brand ambassadors, reflecting a strong commitment to brand loyalty and customer satisfaction.
  • Effective Control Measures: The ability to define operating parameters and internal control measures has enabled the company to grow its business not only across Andhra Pradesh and Telangana but also in other jurisdictions through its e-commerce platform.
  • Attractive Valuations: The IPO price is attractively priced between 11x to 16x.

Risk Factors in Manoj Vaibhav Gems IPO

Here is a summary of the risk factors associated with this IPO.

  • Retail Network Expansion Risk: If the company is unable to effectively manage and expand its retail network and operations or execute its growth strategy, the new showrooms may not achieve the expected levels of profitability. This could have an adverse impact on the company’s business prospects, financial condition, and operational results.
  • Non availability of quality material: The non-availability or high cost of quality raw materials such as gold bullion, silver, diamonds, and precious and semi-precious stones may negatively affect the company’s business, operational results, and financial condition.
  • Limited Product Diversification: Inability to expand product offerings in a diversified manner and adapt to changing market requirements may have an adverse effect on the company’s business, operational results, and financial condition.
  • Working Capital Requirements: The company has significant working capital requirements and may require additional capital and financing in the future. Its ability to access capital at attractive costs depends on its credit ratings. Failure to obtain required additional capital and financing when needed could curtail operations.
  • Geographic Concentration: Currently, the company’s showrooms are concentrated in the states of Andhra Pradesh and Telangana. Utilizing the net proceeds to expand its presence in these regions exposes the business to risks associated with changes in the political scenario, economic conditions, natural calamities, or force majeure events in these states, which could negatively impact sales and results of operations.
  • Promoter Guarantees: Promoters have provided personal guarantees to secure certain loan facilities. If these guarantees are revoked or invoked, it may require alternative guarantees, repayment of due amounts, or termination of facilities, which could affect the business.
  • Legal Proceedings and Litigation: The company, its promoters, and directors are involved in certain legal proceedings and potential litigation. As no provisions have been made in the financial statements for such liabilities, an adverse decision in these proceedings could result in liabilities, penalties, and negatively affect the company’s business and operational results.

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Manoj Vaibhav Gems IPO Review – Is this good or bad for investment?

Investing in the Manoj Vaibhav Gems ‘N’ Jewellers IPO offers the opportunity to be part of a strong regional jewelry brand with a hyperlocal retail strategy. With an early mover advantage in Andhra Pradesh, the company has a diverse product range catering to various budgets and a history of steady revenue growth. Forward-thinking expansion plans, attractive valuations, and an experienced management team along with attractive IPO price are among the major positive factors.

However, potential risks include challenges in effectively managing and expanding retail operations, along with the risk of fluctuating material costs and availability. The company may face limitations in diversifying its product offerings and meeting market requirements. Significant working capital requirements and geographic concentration in Andhra Pradesh and Telangana pose additional risks.

Investors who has gone through all positive and risk factors can invest in such IPOs.

Suresh KP

One comment

  1. Sir,
    the co. is O.K but, the prob. is with the anchor investors. I have not seen such type of anchor investors in a mainline IPO. Generally, it is visible in the SME IPOs. No MF is investing in this IPO.
    But, I am going to apply this IPO after going through your analysis.
    Now, Pl. suggest me should i subscribe or avoid?
    Looking for your early reply.
    thanks in adv.

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