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

Manoj Vaibhav Gems ‘N’ Jewelers Limited is gearing up for an initial public offering (IPO) scheduled to begin offering on September 22, 2023. This IPO has received a lot of attention from investors. In this comprehensive article, Manoj Vaibhav Gems IPO This includes important dates, company information, potential strengths, and risks to help investors decide whether to invest.

Also read: SignatureGlobal IPO – Should you invest or avoid?

Manoj Vaibhav Gems IPO Details

IPO schedule table

About Manoj Vaibhav Gems ‘N’ Jewelers Limited

Established in 2003, Manoj Vaibhav Gems ‘N’ Jewelers Limited (also known as Vaibhav Jewelers) has established itself as a prominent regional jewelery brand in South India.

• The company offers a wide variety of jewellery, including gold, silver, diamond jewellery, and precious stones. These products are available through retail showrooms and online platforms.
• Vaibhav Jewelers caters to various economic strata of the small markets of Andhra Pradesh and Telangana through its retail showrooms and has a strong presence in both rural and urban markets.
• Currently, the company operates 13 showrooms, including two franchisee showrooms, across eight towns and two cities in Andhra Pradesh and Telangana.

Manoj Vaibhav Gems ‘N’ Jewelers Limited Financial Snapshot

subject of the problem

Manoj Vaibhav Gems IPO size The issuance amount is Rs 270.2 crore, which includes both OFS of Rs 6,020 crore and new issue of Rs 210 crore.

1) In OFS, the amount is paid to the selling shareholder and the company gets nothing.

2) For new issues, net proceeds will be allocated to:

• Funding the proposed establishment of eight new showrooms.
  • capital expenditures for the proposed eight new showrooms;
  • Inventory costs for the eight new showrooms proposed;
• General corporate purposes.

Valuation of this IPO

Manoj Vaibhav Gems IPO price range is Rs 204-215 per share

• Considering last year’s FY2023 EPS was Rs 18.32, the P/E ratio is 12x.
• Considering the last three years’ weighted EPS of Rs 13.77, the P/E ratio is 16x.
• Publicly traded peers such as Titan have a P/E ratio of 92x (highest), Tribovandas Bhimji Zaveri’s P/E ratio of 15x (lowest), and the industry average P/E ratio of 30x. Therefore, an IPO price range of 12x to 16x P/E is attractive.

Manoj Vaibhav Gems IPO GMP (Gray Market Premium)

We have searched various sources but have not found any transactions taking place offline to confirm the gray market premium of Manoj Vaibhav’s IPO.

Positive factors of Manoj Vaibhav Gems IPO

Investors should also consider the following positive factors when considering this IPO.

• Hyperlocal retail strategy: The company has built a strong regional brand with a hyper-local retail strategy and is a leading player in the South Indian jewelery market.
• First mover advantage: Manoj Vaibhav Gems ‘N’ Jewelers had the advantage of being the first to enter Andhra Pradesh and establishing a strong presence in the region.
• Focus on rural market: The company is characterized by a focus on both rural and urban markets, catering to a wide range of economic segments.
• Diverse product range: The company offers gold, silver, diamond jewellery, precious gemstones, etc., offering a diverse product range that caters to customers in different budget ranges.
• Customer-centric approach: The company’s philosophy of “Relationships by Design” fosters customer loyalty by focusing on quality products, transparency, and excellent customer service.
• Effective go-to-market strategies: Manoj Vaibhav Gems ‘N’ Jewelers’ go-to-market strategy has enabled them to connect with a wider customer base and foster strong customer relationships.
• Experienced leadership: We boast an experienced promoter and a professional senior management team, ensuring effective strategy implementation and smooth business operations.
• Brand Ambassador: Both employees and customers are considered brand ambassadors, reflecting a strong commitment to brand loyalty and customer satisfaction.
• Effective control measures: The ability to define operational parameters and internal control measures has enabled the company to grow its business in Andhra Pradesh and Telangana as well as other jurisdictions through its e-commerce platform.
• Attractive valuation: The IPO price is attractive at 11 to 16 times.

Manoj Vaibhav Gems IPO Risk Factors

A summary of the risk factors associated with this IPO is as follows:

• Risks of retail network expansion: 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 expected levels of profitability. This could adversely affect our business prospects, financial condition and results of operations.
• If quality materials are not available: Unavailability or increased prices of high-quality raw materials, such as gold bullion, silver, diamonds, and precious and semi-precious stones, could adversely affect the Company’s business, results of operations and financial condition.
• Limited product diversification: If we are unable to expand our product offerings in a variety of ways and adapt to changing market requirements, our business, results of operations and financial condition could be adversely affected.
• Working capital requirements: The Company has significant working capital requirements and may require additional capital and financing in the future. Access to capital at an attractive cost depends on your credit rating. If we are unable to obtain additional capital or financing when needed, our business may decline.
• Geographical concentration: Currently, the company’s showrooms are concentrated in Andhra Pradesh and Telangana. Utilizing the net proceeds to expand its presence in these regions exposes the company to risks related to changes in the political scenario, economic conditions, natural disasters, or force majeure events in these states, which could result in sales or This may have a negative impact on our business results.
• Promoter’s guarantee: Sponsor provides personal guarantees to secure certain financing facilities. If these guarantees are canceled or triggered, we may be required to replace them, repay amounts owed or terminate our facilities, which could affect our business.
• Legal proceedings and litigation: The Company, its promoters and directors are involved in certain legal proceedings and potential litigation. Because the financial statements do not provide for such liabilities, an adverse decision in these proceedings could result in liabilities and penalties that could adversely affect the Company’s business and results of operations. there is.

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

Investing in Manoj Vaibhav Gems ‘N’ Jewelers IPO offers an opportunity to be part of a strong regional jewelery brand with a hyper-local retail strategy. Leveraging its first mover advantage in Andhra Pradesh, the company has a diverse product range that caters to different budgets and a history of stable revenue growth. Positive expansion plans, attractive valuation, experienced management team and attractive IPO price are among the main positive factors.

However, potential risks include the risk of fluctuations in material costs and availability, as well as challenges in effectively managing and expanding our retail operations. The Company may face limitations in diversifying its product offerings and meeting market requirements. High working capital requirements and geographic concentration in Andhra Pradesh and Telangana pose additional risks.

Investors who have experienced all the positive and risk factors can invest in such IPOs.

Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. I have been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.

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