BlueStone IPO: Can the digital-first jeweller justify its ₹7,823 crore valuation?

Mint

2 days ago

BlueStone, India's second-largest digital-first omni-channel jewellery brand, is stepping into the public markets with an initial public offering (IPO) that is notably cheaper than the ₹578 per share its promoters paid just eight months ago. Priced at ₹492- ₹517, the ₹1,540.65 crore issue raises the question: does this discount outweigh the risks of steep valuations and ongoing net losses?
The offer, which opened today, comprises a fresh issue of ₹820 crore and an offer-for-sale worth ₹720.65 crore. Selling shareholders include Accel India, Saama Capital, and Kalaari Capital, each locking in substantial returns of 480%–962% on their early bets. With 275 stores across 117 cities, BlueStone sells contemporary lifestyle jewellery in diamond, gold, platinum, and studded designs.
At the upper end of the price band, the IPO values BlueStone at roughly ₹7,823 crore. Of the fresh proceeds, ₹750 crore will fund working capital, with the rest going toward general corporate purposes.
But before considering an investment, it's worth unpacking BlueStone's growth drivers, competitive edge, and valuation.
How does BlueStone's business model work?
BlueStone runs an omni-channel jewellery business under its flagship brand, blending a digital-first, direct-to-consumer (DTC) approach with a rapidly expanding offline presence.
It sells through its website and mobile app, as well as its 275 stores across 117 cities, 200 company-owned and 75 franchised.
Its online and offline channels are tightly linked: customers often browse designs online before visiting a store, or place orders online for store pickup or home delivery. This integration not only lifts conversion rates but also guides decisions on where to open new stores, boosting the odds of early profitability. Roughly 75% of outlets turn profitable within three months of opening.
As of March, the company offered 7,400 designs across 91 collections, including rings, earrings, necklaces, pendants, solitaires, bangles, bracelets, and chains. Studded jewellery is its core strength, contributing 68% of FY25 revenue, far ahead of Titan (27%) and Kalyan (30%).
Prices range from under ₹5,000 to over ₹17 lakh, with average order values rising from ₹32,038 in FY23 to ₹47,671 in FY25.
Key strengths
BlueStone's brand positioning is tuned to changing buying behaviour. In 2024, an estimated 50-60% of jewellery purchases were digitally influenced.
The company's online-first approach drives discovery, engagement, and store traffic. Its social reach includes 2.65 million Facebook followers, 713,000 on Instagram, and 161,000 on YouTube.
This strategy has paid off: unique online sessions jumped from 818 lakh in FY23 to 2,988 lakh in FY25, while its active customer base nearly doubled from 390,959 to 771,845 over the same period. While physical stores contribute 93.3% of revenue, the online platform remains a powerful lead generator.
Moreover, unlike legacy jewellers focused on bridal or high-value investment pieces, BlueStone targets lighter, design-led jewellery for daily wear and special occasions.
This appeals to the 25-45 age group, younger, design-conscious buyers more influenced by digital engagement. This segment remains underpenetrated by large incumbents, offering room for growth.
In-house manufacturing advantage
Bluestone's vertically integrated model is another moat.
It manufactures over 75% of its jewellery in-house, making it the largest retailer in India with such capacity. This vertical integration allows strict quality control, faster design-to-store timelines, and innovations such as same-day delivery and 'try-at-home" services.
Repeat revenue rose from 34.67% in FY23 to 44.61% in FY25, among the highest in the industry.
Despite its heavy marketing investments, BlueStone spent only 9% of revenue on advertising in FY25, down from 10.9% in FY23, placing it among the top four jewellers in India with the lowest marketing spends. This, however, is higher than Titan (5%) and Kalyan (1.9%).
Store expansion and manufacturing footprint
Between FY23 and FY25, BlueStone opened 120 new stores across India, averaging about 60 per year. The network is well-diversified, avoiding over-reliance on any single region.
Of its 275 stores, 145 are in tier-I cities, 77 in tier-II, and 53 in tier-III. Same-store sales grew 32% in FY25, strong, but lower than the 72% growth in FY23, partly due to new store openings diluting the growth rate.
Geographically, the North leads with 83 stores, followed by the South (77), West (65), and East (50). Store-level economics remain healthy, with nearly 75% breaking even within three months of launch.
For outlets operational for more than three years, average monthly revenue has risen from ₹55.9 lakh in FY23 to ₹76.8 lakh in FY25.
Of the total stores, 75 stores are owned by franchisees who provide the entire capital for these outlets, including investment and inventory costs. In return, Bluestone offers a high minimum guaranteed return on investment or store revenue. This model helps the company to grow rapidly with low upfront costs and low risk.
However, BlueStone plans to expand its network of company-owned stores to reduce dependence on franchise capital. Bluestone intends to open over 290 new stores between FY25 and FY27, expanding across existing cities and new markets.
As of March, BlueStone had three manufacturing facilities in Mumbai, Jaipur, and Surat. Capacity utilization at these plants has steadily improved over FY23-25, reflecting both strong demand and the efficiency of its vertically integrated model.
Financial performance
The company's revenue has doubled, from ₹771 crore in FY23 to ₹1,770 crore in FY25. This growth has been driven by growth in customer base, store count, and average order value.
The company commands a gross margin of 37.9%, up from 31.9% in FY23, which is higher than Titan's (21.5%) and Kalyan's (13%). The margin is higher due to a greater contribution from higher-margin studded jewellery.
The company has also turned profitable at the Ebitda level, with a margin of 4.1% in FY25 compared to a loss margin of 7.3% in FY23. Ebitda swung from a loss of ₹56 crore in FY23 to a profit of ₹73 crore in FY25.
Despite operational improvement, BlueStone remains loss-making at the net level. Its losses widened from ₹167 crore to ₹222 crore over the same period. Rising finance costs, employee benefits and depreciation expenses have eroded the benefits of strong revenue growth and weighed on overall profitability.
On the balance sheet, total borrowings have risen from ₹228 crore in FY23 to ₹729 crore in FY25. However, its net-debt-to-equity ratio remains comfortable at 0.67 times, supported by cash and other deposits exceeding ₹500 crore.
Inventory levels have risen sharply, from ₹395 crore in FY23 to ₹1,652.5 crore in FY25. A demand slowdown could risk excess inventory or under-stocking, impacting business performance. Nonetheless, the company believes its store revenue productivity has significant room for growth. Same-store sales growth across existing and new outlets is expected to drive expansion in store-level margins and return metrics.
Valuation and outlook
From a valuation standpoint, BlueStone's asking price appears steep, at over 4x sales and about 115x Ebitda, significantly higher than peers. In comparison, Senco Gold is at 0.8x and 15.8x, PN Gadgil at 1x and 21.3x, and even the fastest-growing Kalyan Jewellers trades at about 2x and 32x.
For more such analysis, read Profit Pulse.
That said, the IPO pricing is below the ₹578 per share that the company allotted to its promoter in December 2024, offering some comfort to investors. Still, profitability challenges and the valuation premium remain concerns.
Key risks include sustained losses, gold price volatility, and rising competition from lab-grown diamonds. Yet, with India's daily-wear jewellery segment projected to grow 15-18% annually to ₹5 trillion, and account for 40-45% of the total jewellery market, BlueStone is well-positioned to capture an expanding niche.
Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.
The writer does not hold the stocks discussed in this article.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.