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Kalyan Jewellers IPO Review and Analysis in Detail


Basis Structure of Kalyan Jewellers IPO

The Kalyan Jewellers IPO is expected to hit the Indian Stock Markets in March 2021. The company received a nod from SEBI on October 15, 2020.

This will be an entirely book-building IPO. The shares being offered will be quoted with a price band.

This issue has been sized at about Rs. 1,175 crores. This will be a combination of an offer for sale (OFS) and a fresh issue.

An offer for sale refers to the sale of those shares which are not being newly issued by the company. These shares have already been diluted, and belong to someone or some organization.

The offer for sale segment is thus sold directly by the existing shareholder and any proceeds from the sale are credited directly to that shareholder. The company does not receive any of the profits. In this case, the offer for sale segment has been estimated at Rs. 375 crores. 

As for the fresh issue, that comprises of the shares which are being freshly diluted by the company. This segment amounts to Rs. 800 crores.

The capital from the fresh issue goes directly to the company. In this case, Kalyan Jewellers will be utilizing that amount to strengthen the working capital requirements as well as for general corporate purposes.

The table below summarizes all the details regarding the IPO. Details like the Kalyan Jewellers IPO date, Kalyan Jewellers IPO share price and others have been summarized.

IPO Details

After the Kalyan Jewellers IPO, the shares will be listed on NSE and BSE.

Kalyan Jewellers: An Overview

Kalyan Jewellers started with a single showroom in 1993 in Thrissur, Kerala.

As of June 2020, the company had expanded to 107 showrooms spread around 21 states and union territories across India. Apart from that, Kalyan Jewellers also owns and operates 30 showrooms located in the Middle East.

The company operates primarily on a B2C model.

Products & Services

Kalyan Jewellers’ product portfolio comprises a range of jewellery products across different price ranges, occasions and materials.

On the basis of material, the products can be classified into three categories – gold, studded and others. Studded jewellery includes diamonds and other precious stones. Others include silver, platinum and other precious metals.

The table below shows the revenue break-up between the three categories.

Product Revenue Break-up


As mentioned above, Kalyan Jewellers works primarily on a B2C model.

The company has a wide range of customers spanning different regionalities, traditions and customs.

In 2020, 78.19% of the revenue from operations came from India while 21.81% was from the Middle East. As for within the country, 42.31% of the revenue came from the operations in South India (Kerala, Karnataka, Tamil Nadu, Pondicherry, Andhra Pradesh and Telangana). 51.29% of the revenue from operations came from sales in Tier 2 and Tier 3 cities.

Management Shareholding Pattern

The table below lists out the details of the major shareholders of Kalyan Jewellers along with their stake prior to the IPO.

Management Shareholding Pattern

Financial Overview

The table below summarizes the key financial figures of Kalyan Jewellers from 2017 to 2020. The figures below are in Rs. Crores.

Financial Overview

As we can see, the total revenue earned by Kalyan Jewellers does not show a consistent increase.

Total Revenue

In fact, in FY 2019, the revenue earned fell by over 9%. This is attributed to an experimental strategy that the company adopted in that year. Because of this reason, the sales revenue fell by 7%.

The questionable strategy was withdrawn after that year, and as we can see, in FY 2020, the revenue again increased by 3.58%.

Another factor that can contribute to the dismal performance in FY 2019 is the severe floods that hit the southern part of India during this time. Owing to this, the demand for gold jewellery was affected.

The total assets owned by the company has shown a CAGR of 5.02% between 2017 and 2020.

As the revenue from operations declined in FY 2019, this is also reflected by the net profit earned by the profit.

Net Profit

From 2018 to 2019, the net profit declined by 67.35%.

In FY 2020 however, the company bounced back and the net profit earned increased by 71.26%.

One positive fact to note here is that the long-term debt of Kalyan Jewellers has shown a consistent decline over the years. The CAGR between 2017 and 2020 is (38.64) %.

Industry Analysis

The global jewellery market was sized at about $220 billion in 2018. China is the largest contributor here, and India comes in at a second place.

Industry Analysis 1

As for India, expenditure on jewellery is one of the top constituents of retail consumption. In 2020, the amount spent on jewellery amounted to Rs. 449 thousand crores. This is expected to grow to Rs. 633 thousand crores by 2025.

Industry Analysis 2

Industry Analysis 3

This means the size of the retail jewellery market was Rs. 448 thousand crores in 2020. Out of this, the organized size of the retail market is Rs. 147 thousand crores.

Industry Analysis 4

In fact, this is one of the fastest-growing organized retail markets in India. From a share of 6% in 2007 to 32% in 2020, the organized share of the jewellery retail market is increasing steadily. It is expected to grow to 37% by 2025.

Industry Analysis 5

Industry Analysis 6

The organized retail market is dominated by large players like Tanishq and Kalyan. It is expected that the organized segment will gradually take over the unorganized segment of the market.

The structure of the market is indicative of the fact that there is a high level of competition among the large players in the field.

As for the market itself, that is of a monopolistic competition structure. There are many sellers and a large number of buyers.

Such markets are characterized by intense competition among the players for a larger market share.

The players themselves are similar in nature, especially the larger players. Any strategies or price policies that one might adopt will probably get mirrored by the other similar size.

In the overall jewellery market in India, Kalyan Jewellers commands a 1.8% market share. As for the organized segment of the jewellery market, here, Kalyan has a 5.9% market share.

Peer Comparison

The retail market for jewellery is characterized by free entry and exit. Barring the cost of production, and the permits required for obtaining the precious raw materials, firms can enter into this market easily.

This means there is a high level of competition among the large players in the market.

The table below lists out the key financial figures of Kalyan Jewellers and compares them with its listed peers.

Peer Comparison

If you compare the figures of Kalyan Jewellers with the other prominent listed jewellery retailers, you will notice that Kalyan Jewellers has performed better on the aggregate.

Of course, do remember to keep in mind that these figures include the disastrous impacts of COVID-19 on this market.

In terms of revenue growth, return on assets and return on equity, Kalyan is second only to Vaibhav Global.

When it comes to the operating margin, however, we can see that Kalyan’s operating margin is the lowest, in comparison to its peers.

The operating margin to the profit that the company makes on each rupee of sales, i.e., revenue from operations. It is a profitability metric and indicates how effective the company’s core operations are.

In this case, Kalyan’s operating margin is quite low, which indicates that it is not making much profit in terms of its core revenue.

Strengths of Kalyan Jewellers IPO

One of the primary advantages that Kalyan Jewellers enjoys is the fact that it has a pan-India presence. With showrooms across 21 states and union territories, the company has access to a diverse and vast group of customers.

In order to take full advantage of this access, Kalyan has actually designed location-specific portfolios of design. This means, the different showrooms across the country actually stock different designs.

Apart from that, Kalyan has also developed a network of smaller centres called the “My Kalyan” network, that serves as satellite locations. This enables them to tap into those areas which are underserved and otherwise expand their outreach. Currently, there are 761 “My Kalyan” centres across India.

As mentioned above, Kalyan Jewellers operates in a market where there is intense competition among peers.

The products that are sold by the different companies are quite similar and this is why the marketing strategies and other promotional plans often make a difference in capturing the market.

In 2020, Kalyan Jewellers spent approximately Rs. 282.19 crores on marketing. This amounted to almost 3% of its total revenue from operations.

Marketing Expenses

Weaknesses of Kalyan Jewellers IPO

As mentioned above, Kalyan Jewellers operates in a monopolistically competitive market. This means there are many sellers who sell similar products.

There is a very high level of competition among Kalyan Jewellers and its peers. If Kalyan’s performance drops for some reason, it will be very easy to lose out on market share.

Apart from that, there is, of course, the unignorable effect of COVID-19. Due to COVID-19 and the immense drop in demand it caused, the company’s revenue has been impacted.

To deal with the implications of the virus on the retail jewellery industry, Kalyan has availed of loans amounting to Rs. 132 crores from State Bank of India and Bank of Baroda.

This will put a strain on the company’s balance sheet and increase its liabilities and debt burden.

There is also the matter of the previous lines of credit which were already pending repayment.

Kalyan Jewellers, like most other jewellery companies, avail of lines of credit at the beginning of the production cycle to pay for the raw materials required.

Once the production process is complete and the sale of the jewellery begins, revenue starts to flow in. Companies use this revenue to repay the original capital.

As of March 31, 2020, the total amount of debt outstanding for Kalyan Jewellers came up to Rs. 3,640.31 crores.

The market for precious jewellery is subject to certain regulations and restrictions. Because the production deals with precious metals like gold, Kalyan requires certain approvals and permits from the government.

If at any point, Kalyan Jewellers fails to meet the regulatory requirements of the government, their license can be withdrawn and their business operations can be negatively impacted.

Valuation of Kalyan Jewellers IPO

The table below summarizes the key valuation parameters for Kalyan Jewellers and its listed peers.


In order to check the valuation of a company, there are several measures that we can use.

The most popular metric is the Price to Earnings ratio. It shows the amount that an investor has to invest in the company in order to get Rs. 1 of the company’s earnings.

In other words, the lower the P/E ratio, the better it is for the company.

As a thumb rule, the P/E ratio is compared with the average P/E value for the industry.

If the company’s P/E ratio is higher than the industry average, this means the company is overvalued. On the other hand, if the P/E ratio is lower than the industry average, then the company is undervalued.

In this case, the average P/E ratio for the industry is 62.75. This means, the Kalyan Jewellers IPO is undervalued.

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