Kerala jeweller Joyalukkas files for ₹2,300 crore IPO

Jewellery company Joyalukkas has filed the draft papers for raising ₹2,300 crore via an initial public offering (IPO). Proceeds from the issue will be used to repay some of the debt of the company as well as expand its footprint in the country.

The draft red herring prospectus (DRHP) Joyalukkas filed with the Securities and Exchange Board of India (SEBI) states that the issue will consist entirely of fresh issue of shares, with no offer for sale component. The issue will have a face value of ₹10 per equity share for the proposed share sale. As of now, the company has 770,376,200 equity shares prior to the issue.

Joyalukkas is making the offer through the book building process, wherein not more than 50% of the offer shall be available for allocation to qualified institutional buyers (QIBs), not less than 15% of it shall be available for allocation to non-institutional bidders, and not less than 35% of the offer shall be available for allocation to retail individual bidders, the DRHP read.

The company may allocate up to 60% of the QIB portion to anchor investors on a discretionary basis, of which one-third shall be reserved for domestic mutual funds, subject to valid bids at or above the anchor investor allocation price. Further, 5% of the net QIB portion shall be available for allocation on a proportionate basis only to mutual funds, and the remainder of the net QIB portion shall be available for allocation on a proportionate basis to all QIB bidders, including mutual funds.

The Kerala-based jeweller will use ₹1,400 crore out of the proceeds from the issue for repayment or pre-payment, in full or part, of certain borrowings, whereas ₹463.9 crore will be used to finance new showrooms during FY23 and FY24. The remainder of the net proceeds will be used for general corporate purposes.

Founded by Alukkas Varghese Joy, who is the promoter and managing director of the company, Joyalukkas is present in 68 cities across India through 85 showrooms. It also started an e-commerce platform for its products in March 2018, allowing customers to browse and purchase jewellery online. The company claims a customer base of 2 million.

Its jewellery business includes the sale of jewellery made of gold, studded and other jewellery products that include diamond, platinum, silver and other precious stones. In FY21, the gold category accounted for 84.24% of its overall revenue from operations, whereas diamonds and others, including silver and pearls, made up 14.14% and 1.62% respectively.

Joyalukkas reported a profit of ₹471.75 crore in the financial year 2020-21 against ₹40.71 crore in the previous fiscal. Revenue from operations rose 0.53% to ₹8,066.29 crore in FY21 from ₹8,023.79 crore in FY20, on the back of increase in retail sales and other operating revenue as the impact of Covid-19 pandemic ebbed.

According to a company-commissioned Technopack report, Joyalukkas posted the highest EBITDA per square foot in FY21 and the highest PAT amongst the top players in India. Net debt to equity ratio has fallen from 1.04 in 2019 to 0.77 as on September 30, 2021.

Joyalukkas has roped in Edelweiss Financial Services, Haitong Securities India, Motilal Oswal Investment Advisors and SBI Capital Markets as the book running lead managers to the issue.