RBZ Jewelers IPO Review – GMP, Pricing, Details & More

RBZ Jewelers IPO Review: The Indian market is the world’s largest consumer of gold jewelry, slightly ahead of China with a market share of 28.8%. The jewelery market is worth an astonishing 4.6 billion Cr, of which 85% is gold jewellery.

A small gold jewelery manufacturer is pursuing an IPO to capitalize on the country’s love affair with gold. The company, RBZ Jewelers, is issuing shares worth Rs. 100Cr on December 19, 2023.

RBZ Jewelers IPO Review

Let’s learn more about the company and understand what part of the gold market it serves. We will then analyze its strengths and weaknesses and compare them to its listed peers before coming to a conclusion.

RBZ Jewelers IPO Review – About Us

RBZ Jewelers is one of the leading gold jewelery manufacturers in India specializing in antique bridal gold jewelery with Jadau, Meena and Kundan work. According to a Care Edge report, RBZ owns 1% of the organized wholesale jewelery market in India.

The beginnings of the business date back decades when Shri Bababhai Hargovandas Zaveri, a goldsmith from Patan, Gujarat, laid the foundations of the family gold business. The company was renamed RBZ Jewelers in 2008 with Kantilal, Kiranben and Harit Zaveris as founding members.

The company owns a 23,966 sq ft manufacturing facility in Gujarat and retail space in the satellite area of ​​Ahmedabad. It has 11,667 Sq.ft of retail space, of which the company owns 10,417 Sq.ft.

The company engages in a wide variety of businesses including: all, Sleeve, gold bullion sale Gems, and much more. Now, let’s learn more about the company’s business segments.

RBZ Jewelers – Business Divisions

We entered the distribution sector with the brand launch in 2014. Harit Zaveri. This segment offers a collection of bangles, rings, bracelets, necklaces and jewelery sets in gold, diamonds and polki. Currently, the retail segment has a 37% share of the overall business, with the segment growing at a CAGR of 59% in one year and 107% in three years.

Before that, RBZ was leading a wholesale business that produced and sold jewelry in bulk. This segment is RBZ’s largest segment, accounting for 48% of FY23 revenue. However, the segment has maintained a CAGR of 43% over the past three years, but has declined by 12% since FY22.

Other segments include gold bullion sales, miscellaneous jewelery sales and job work services, where other brands outsource the company to manufacture jewelery under their own brands. These segments account for 7%, 5%, and 3% respectively.

RBZ Jewelers IPO – Industry Introduction

According to Care Edge Report, India’s domestic jewelery market has grown to Rs. 4.64 Lakh Cr in CY22 compared to Rs. 2.3 Lakh in CY16. Rising living standards due to a growing working population and rising disposable income have driven this strong growth.

As of CY20, the organized jewelery retail market share is only about 32%, with many small jewelery players operating in the unorganized market. However, the market share of organized players is expected to increase to 40% by CY25.

It is estimated that approximately 1-1.3 Cr weddings of various sizes and scales take place in India every year. wedding jewelry It is the biggest expense, accounting for 24% of wedding expenses.

In the gold jewelery sector, retailers typically purchase jewelery from wholesalers who either manufacture it themselves or outsource the manufacturing to workers. This trend has increased significantly over the years with the growth of large retail chains recognizing the value of sourcing from wholesalers due to the variety of designs and product innovations.

The domestic gold wholesale jewelry industry is expected to grow at a compound annual growth rate (CAGR) of 2.5% from 378 tons in 2022 (out of total gold jewelry demand of 600 tons) to 402 tons by 2025 and 475 tons by 2030.

RBZ Jewelers IPO Review – Financials

RBZ Jewelers reported revenue of Rs. 290 Cr in FY23, an increase of 14.69% from Rs. 252 Cr in FY22. The business has grown revenue at an impressive CAGR of 64% over the past three years.

The net profit of the business increased at a better rate of 55% from Rs. 14 Cr in FY22 to Rs. 22 Cr in FY23. The company has maintained growth at 51% CAGR since FY21.

The company has maintained EBITDA margins in the 11-20% range over the past three years. The net profit margin during the same period was approximately 6-10%.

The company maintained healthy return on equity and return on capital employed of 27.49% and 20.08%. Maintaining ROCE above 20% despite a debt-to-equity ratio of 1.04x is commendable.

The company is reporting surging profits, but unfortunately these profits have not translated into actual cash flow. The company’s operating cash flow decreased to 10 billion won. -12.22 Cr in 2023. This is due to an increase in inventory assets of 500 billion won. 30.18Cr.

A look at the balance sheet shows that in FY23, the company’s inventory was worth Rs. 149 Cr is approximately 72% of the company’s total assets. This unliquidated inventory leads to a liquidity crisis for the company, which ultimately leads to lower returns.

Let us now take a look at the listed jewelers in the country to understand how RBZ stacks up against its peers.

RBZ Jewelers – Key Players

At the higher end of the price spectrum, the company would be valued at 13.44x. This would make RBZ the cheapest stock in terms of returns when compared to its peers.

In terms of return on book value, RBZ is just behind Titan Company and DP Abhushan with a P/E ratio of 93x and 28x. However, in terms of revenue, the company remains the smallest in size, just above Ashapuri Gold.

Company Strengths

1. The company has a list of Marquee customers that includes: Titan, malabar, zoya lucasand many others.
2. With a single integrated manufacturing facility in Gujarat, the company is able to house the entire chain from design to manufacturing under one roof. This type of efficient setup is preferred by large clients.
3. RBZ has a very diversified business in terms of segments as well as customers. The company’s top 10 customers account for just 20.68% of FY23 revenue.
4. Due to the wholesale-focused nature of its business, RBZ can run out of inventory more quickly than its retail business.
5. The Promoter family belongs to the family of jewelery manufacturers. Promoter Kantilal Zaveri has over 35 years of experience in the industry. This experience allows the company to improve its manufacturing by combining antique designs with the latest technology.

company’s weaknesses

1. Due to the capital intensive nature of the jewelery business, the company faces working capital issues. This resulted in a debt-to-equity ratio of 1.04x in FY23 and 0.98x in H1FY24.
2. As a jewelry manufacturer, the company faces the risk of gold price fluctuations. Additionally, the Company does not have exclusive supply chain agreements or forward contracts to hedge price risk.
3. The company’s inventory issues discussed in the financial sector remain a major concern. Failure to clear this inventory could have a negative impact on the company’s balance sheet.

RBZ Jewelers IPO Review – GMP

There is currently no information about GMP. We will update the article as we receive information.

Key IPO Information

promoter: Rajendrakumar Kantilal Javeri & Harit Rajendrakumar Javeri

Book Operations Lead Manager: Arihant Capital Markets Ltd.

Proposal registered by: BigShare Services Pvt Ltd

purpose of the problem

1. 80% of the issued funds will be used to meet the company’s working capital requirements.
2. The remaining amount will be utilized for general corporate purposes.

conclusion

We now conclude an article in which we have tried our best to cover everything possible about IPO issues. We see RBZ as a strong competitor in the wholesale sector and even gaining significant traction in the retail sector. Profit growth was in double digits.

However, the company’s liquidity problem became its biggest challenge. Aside from these looming challenges, the company has a lot of room to grow.

So what do you think about RBZ? Do you think it’s worth applying for an IPO? Please let us know in the comments below.

Written by Nasir Hussein

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