Manoj Vaibhav Gems ‘N’ Jewellers IPO Subscribed 2.25 times

The ₹270.20 crore Manoj Vaibhav Gems ‘N’ Jewellers IPO, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹210 crore while the offer for sale (OFS) was worth ₹60.20 crore. The IPO pricing was done in the band of ₹204 to ₹215 per share with the final price to be discovered through the process of book building. While the QIB portion picked up traction on the last day, the overall journey was quite slow. In fact, the HNI / NII portion got the best subscription, followed by the retail portion and the QIB portion in that order. In fact, all the 3 segments were undersubscribed at the end of the second day and only got fully subscribed on the last day of the IPO. This also applies to the overall IPO, obviously. The table below captures the day wise progression.

As can be seen from the above table, the overall IPO got 2.25 times subscribed at the close of the third and final day of the IPO on 26th September 2023.

Rapid update on the overall IPO response

The IPO saw very tepid progress on Day-1 and Day-2 of the IPO and closed with relatively weak subscription numbers at the close of Day-3. In fact, the company got fully subscribed only on the last day of the IPO, and this was the story for all the segments of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Manoj Vaibhav Gems ‘N’ Jewellers Ltd IPO was subscribed 2.25X overall, with best demand coming from the HNI / NII segment, followed by the retail segment and the QIB segment in that order. In fact, the institutional segment saw limited traction on the last day. The HNI portion did do well and a some of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively timid and got fully subscribed only on the last day of the IPO. Firstly, let us look at the details of overall allocation.

As of close of 26th September 2023, out of the 91.21 lakh shares on offer in the IPO, Manoj Vaibhav Gems ‘N’ Jewellers Ltd saw bids for 205.07 lakh shares. This implies an overall subscription of 2.25X overall. The granular break-up of subscriptions was in favour of the HNI / NII investors followed by the retail investors while the QIB portion got the lowest subscription among the various categories. QIB bids and NII bids typically gather most of the momentum on the last day, but that was the case in this issue for the HNI / NII bids but not so much for the QIB bids. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

On 21st September 2023, Manoj Vaibhav Gems ‘N’ Jewellers Ltd completed the bidding for its anchor allocation. A total of 37,70,160 shares were allotted to a total of 8 anchor investors. The allocation was done at the upper IPO price band of ₹215 (including premium of ₹205 per share) which resulted in an overall allocation of ₹81.06 crore. The anchors have already absorbed 30% of the total issue size of ₹270.20 crore.

Listed below are the 8 anchor investors who got allotted 100% shares as part of the anchor allocation quota for the IPO of Manoj Vaibhav Gems ‘N’ Jewellers Ltd. The entire anchor allocation of ₹81.06 crore was spread across these 8 major anchor investors. The anchor allocation will set the tone for retail participation in the IPO.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 25.74 lakh shares of which it has got bids for 27.20 lakh shares at the close of Day-3, implying a subscription ratio of 1.06X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Manoj Vaibhav Gems ‘N’ Jewellers Ltd IPO subscription overall, the actual demand did not turn to be robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 5.18X (getting applications for 101.72 lakh shares against the quota of 19.64 lakh shares). That is a relatively moderate response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible to an extent as the overall HNI / NII portion added to its heft on the last day of the IPO. Only the HNI / NII portion saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 6.09X while the below ₹10 lakh bid category (S-HNIs) got subscribed 3.35X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 1.66X at the close of Day-3, showing relatively tepid appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 45.83 lakh shares on offer, valid bids were received for 76.16 lakh shares, which included bids for 64.80 lakh shares at the cut-off price. The IPO is priced in the band of (₹204 to ₹215) and has closed for subscription as of the close of Tuesday, 26th September 2023.

Brief on the business model of Manoj Vaibhav Gems ‘N’ Jewellers Ltd

Manoj Vaibhav Gems 'N' Jewellers Ltd was incorporated in the year 2003. It is a very strong and well-entrenched jewellery brand in South India and also goes under the brand of Vaibhav Jewellers. Manoj Vaibhav Gems 'N' Jewellers Ltd offers gold, silver, and diamond jewellery in different traditional and modern designs for its customers. In addition, it also sells precious gemstones, and other jewellery products through retail showrooms offline as well as through its website online. Manoj Vaibhav Gems 'N' Jewellers Ltd predominantly caters across economic segments to the micro markets of Andhra Pradesh and Telangana; two states with a substantial penchant for gold and jewellery purchase. Manoj Vaibhav Gems 'N' Jewellers Ltd broadly caters to the rural and to the urban market. The company currently has 13 showrooms (inclusive of 2 franchisee showrooms) across 8 towns and 2 cities in the states of Andhra Pradesh and Telangana.

Manoj Vaibhav Gems 'N' Jewellers Ltd  offers 5 classes of jewellery for its customers. The Daily-wear Jewellery is plain gold with no stone studding and is preferred for daily use. These include plain gold bangles, simple earrings, plain gold band rings etc. The second is Bridal Jewellery which offers a wide choice of jewellery for women and women for the big occasion. These are more elaborate in detail. Thirdly, the Occasion Weal Jewellery is an extension of bridal jewellery and can be segregated for functions like Mehandi, Sangeet, Roka, etc. Fourthly, there is antique jewellery with fairly elaborate and ethnic workmanship and is used for the relic look. This is more for festivals, house warming etc. Lastly, there is the unique classification of Temple Jewellery, which is again classic workmanship based. Here each piece is curated and handmade. This goes well with tradition festive wear. In short, the company has an offering for every possible Indian occasion.

The proceeds of the fresh issue portion will be used to finance the opening of 8 new stores; including the capex and the inventory cost for these showrooms. A small part of the funds raised will also be used for general corporate purposes. The issue will be lead managed by Bajaj Capital and Elara Capital. Bigshare Services Private Ltd will be the registrar to the issue.