Vaibhav Gems N Jewellers files DRHP for proposed IPO

The IPO market may be showing signs of a nascent recovery after nearly 2 months of quiescence. However, that has not stopped the enthusiasm of fresh IPOs looking to raise funds in the market. The latest to file the draft red herring prospectus (DRHP) with SEBI is the Visakhapatnam based Vaibhav Gems 'N' Jewellers Ltd (Vaibhav Jewellers). Vaibhav is not related to Vaibhav Gems of Mumbai in any way. Vaibhav Jewellers has a strong presence in South India, especially in the states of Telangana and Andhra Pradesh.

The initial public offering (IPO) of Vaibhav Jewellers will consist of a fresh issue of Rs210 crore and an offer-for-sale of up to 43 lakh shares. The offer for sale (OFS) will be done by its existing promoter Grandhi Bharata Mallika Ratna Kumari (HUF), which currently holds 75.1% in Vaibhav Jewellers. The proceeds from the fresh issue component will be used to fund the setting up of 8 showrooms across South India. Vaibhav Jewellers will utilize Rs12 crore for capital expenditure for the 8 retail outlets and Rs160 crore on inventory creation.

Vaibhav Jewellers is a leading hyperlocal jewellery chain based out of South India. It has a strong presence in the states of Telangana and Andhra Pradesh with 13 showrooms spread across 8 towns and 2 cities. In the key markets of Andhra Pradesh and Telangana, Vaibhav Jewellers has a market share of 5%, while it corners nearly 14% market share of the organized jewellery market in these two states. Its total showroom spread measures 95,892 SFT. In next 2 years, the focus will be on opening showrooms in Tier-2 and Tier-3 cities. 

For the fiscal year ended FY22, Vaibhav Jewellers had reported total top line revenues of Rs1694, showing yoy growth of 18% in the top line. The net profits for the period stood at Rs43.68 crore for FY22, which more than doubled compared to just Rs20.74 crore in FY21 fiscal year. With better yields and sharper cost management, the EBITDA margin of Vaibhav Jewellers improved on a yoy basis from 4.85% to 6.20%. Total outstanding debt stands at Rs458.53 crore. Bajaj Capital and Elara Capital will be the Book Running Lead Managers to the IPO.