What's driving the surge in IPOs among jewellery firms?
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Mumbai: A slew of jewellery retail firms is set to tap the primary markets , with at least 10 companies lining up to raise money through initial public offerings (IPOs) over the next 3-6 months, according to people familiar with the matter. Bankers and industry officials said constraints on raising money through lenders, rich valuations and a thriving IPO market are prompting these companies to explore the public market route.Some firms have already filed their IPO documents with Securities and Exchange Board of India (Sebi). These include PNGS Reva Diamond Jewellery, backed by PN Gadgil & Sons, Chennai-based Lalithaa Jewellery Mart and Priority Jewels, a Mumbai-based jewellery manufacturer.Among the companies preparing to file their draft red herring prospectus (DRHP) are RiddiSiddhi Bullions Ltd (RSBL), Nagpur-based Rokde Jewellers and Shankesh Jewellers, Swarnshilp Chains & Jewellers, Royal Chains, and Waman Hari Pethe, according to investment bankers in the know. Emails and calls to these firms remained unanswered."Jewellery companies are among the few consumer sub-sectors that are doing well in an otherwise sluggish consumer market," said Bhavesh Shah, managing director, head - Investment Banking , Equirus Capital.'Investors recognise this trend and are willing to play even the regional brands, which have provided good returns to the shareholders. This is encouraging jewellery companies to consider tapping the capital markets given the capital needs of the business.' The Rs 820-crore IPO of Bluestone Jewellery & Lifestyle will open its IPO from August 11. Barring PNGS Reva, which is aiming to raise Rs 450 crore in the IPO, all the other companies plan to raise between Rs 1,000 crore and Rs 5,000 crore, said bankers. Executives at jewellery firms said IPOs have opened an alternative fundraising route to the tradtional avenues.'The jewellery industry, once largely unorganised, is gradually becoming more structured but access to traditional financing remains a challenge for many players,' said Rajesh Rokde, promoter of Rokde Jewellers and chairman of All India Gems and Jewellery Domestic Council (GJC). 'Going public through an IPO provides an alternative route to raise capital and fund business expansion.'Industry officials said the jewellery sector faces several barriers when it comes to securing traditional bank finance. Many firms operate with high inventory levels in the form of gold and diamonds, which see sharp price swings and are under regulatory scrutiny
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