RBZ Jewellers Ltd – IPO Note

 

 

RBZ Jewellers Ltd. is a Gujarat based Company and one of the leading organized manufacturers of gold jewels in India, specializing in antique bridal gold jewellery and distributor to reputable nation-wide retailers and significant regional players in India. The Company has an extensive client base spread across 20 states and 72. cities within India. The Company operates its retail showroom under the brand name “Harit Zaveri” and is an established player in Ahmedabad who offers a variety of gold and other jewellery items at different price ranges. The Company has its modern, well-equipped manufacturing plant and shop showroom located in Ahmedabad. All gold jewellery products in line are hallmarked by BIS and diamond jewellery is certified by various agencies including IGI and GIA.

Investment Rationale:
India Gems and jewellery Sector- Ridding the bridal wave: 

• The gems and jewellery sector is a key contributor to India’s total exports. G&J accounted for about 9% (INR 3.0 trillion) of India’s total exports in the FY23. G&J imports accounted for comparatively smaller share of about 4% (INR 2.1 trillion) of total imports by the country in the same fiscal.
• The domestic gold jewellery wholesale industry is expected to grow from 378 tonnes (out of 600 tonnes total gold jewellery demand) in 2022 to 402 tonnes by 2025 and 475 tonnes by 2030, at a CAGR of 2.5%. In value terms, the industry size is expected to increase to INR 2,340 billion in 2030 from INR 1,713 billion in 2022.

The Indian Wholesale market in the bridal segment is expected to based on number of weddings increasing per year:

• The Indian Wholesale market in the bridal segment is expected to register ~3% CAGR for the period 2022-2031. Whereas, in non-bridal segment, occasional wear is projected to make ~1.7% CAGR growth for the same period and daily wear is projected to make higher growth of ~3.5%.
• It is estimated that about 10-13 million wedding, of various sizes and scales, are held in India every year. Wedding jewellery accounts for the largest share of the total wedding expenses at 24%.

Adding up retail presence: 

• The company’s retail business was established in the year 2014 in the name of “Harit Zaveri Jewellers” under the brand name of “Harit Zaveri”, with the aim of bringing transparency and ethical practices in maintaining and offering the finest quality and the right price to its customers in the retail market.

Strong and expanding customer base: 

• With a customer base in 20 states and 72 cities, they have established a strong foothold in the market and have a deep understanding of the local customer preferences and trends.
• In Fiscal 2023, RBZ added 16 new customers and in the six months period ended September 30, 2023, it added 15 new customers. It also intends to make a strong footprint in Southern India as South India accounts for 41% of the total jewellery demand in India.

Decent Growth Rates: 

• For the period from April 1, 2023 till September 30, 2023, the Company has achieved a revenue of INR 12,545.68 Lakhs and holds an inventory of INR 178,20.67 Lakhs.
• The order book outstanding as on September 30, 2023 is 50.24 kgs for the wholesale segment as well as 74.39 kgs for orders obtained on a job-work basis.

Valuation and outlook: i. The domestic gold jewellery wholesale industry is expected to grow from 378 tonnes in 2022 to 402 tonnes by 2025 and 475 tonnes by 2030, at a CAGR of 2.5%. In value terms, the industry size is expected to increase to INR 2,340 billion in 2030 from INR 1,713 billion in 2022. ii. India has more than half the population below the age of 25, whereas the average age of marriage for women in India is 22. Therefore, number of weddings per year is expected to increase in the upcoming years. This, in turn, is anticipated to augment demand for bridal jewellery. iii. The Indian Wholesale market in the bridal segment is expected to register ~3% CAGR for the period 2022-2031. iv. The Indian Wholesale market in the bridal segment is expected to register ~3% CAGR for the period 2022-2031. v. With a customer base in 20 states and 72 cities, they have established a strong foothold in the market and have a deep understanding of the local customer preferences and trends. In Fiscal 2023, RBZ added 16 new customers and in the six months period ended September 30, 2023, it added 15 new customers. It also intends to make a strong footprint in Southern India as South India accounts for 41% of the total jewellery demand in India. The company reported revenues of INRINR 2879.28 million in FY23 which grew 14.21% YoY with an EBITDA of INR 377.48 million which grew 14.32% YoY and reported EBITDA margin of 13.11%. RBZ’s PAT was reported at INR 223.33 million which grew 55.03% YoY. The company’s ROE and ROCE was reported at 9.72% and 14.38% respectively in FY23. At the upper end of the price band, the P/E translates to ~17.91x which is lower than the peer average. We recommend to subscribe to the issue as the company has a strong existing client base which it is adding on to, further within the gems and jewellery space,  the company’s focal point being bridal jewellery- could be another strong growth lever for the company and current utilisation levels leave ample scope for future growth.

 

 

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