Jewellery companies are making a beeline to the bourses to get listed. Close on the heels of the listing of Thangamayil Jewellery, Shree Ganesh Jewellery House and Goenka Diamond & Jewels are tapping the capital market, too.
Shree Ganesh Jewellery House, an exporter of gold jewellery, has hit the capital market with an issue of 1.42 crore shares with a price band of Rs 260 to Rs 270, while diamond-jewellery maker Goenka Diamond & Jewels wants to raise between Rs 135 crore and Rs 145 crore. Thangamayil Jewellery, which recently got listed (on February 19), closed at a price of Rs 77.50 on Friday, a 3.33% premium over its issue price of Rs 75. It seems these jewellers wanted to go for an IPO in 2008 itself but the meltdown hampered their plans. Equity markets have bounced back ever since. Then, the demand for jewellery in India also picked up during the festive season, as buyers got adjusted to the higher price regime – be it of gold or other precious metals.
The branded jewellery market is in its infancy in India as most of the market is still unorganised. Distribution is generally through independent jewellers and exclusive stores. Prominent jewellery brands with a significant national footprint include Gitanjali Gems, the flagship company of Gitanjali Group, and Titan Industries? Tanishq. ?The jewellery market is fragmented,? said Amar Singh, head (commodities research), Angel Broking. ?Unless jewellers develop economies of scale they are not going to witness high growth. Through expansion they can capture the latent demand which is expected to grow.?
Madurai-based Thangamayil Jewellery is an established brand in Tamil Nadu and currently operates through five retail outlets. The company is engaged in manufacturing and retailing of precious jewellery and will use the proceeds of the IPO to ramp up the number of its retail showrooms to 11. Shree Ganesh Jewellery House will invest its IPO funds towards its expansion plans in manufacturing and retail.
Goenka Diamond & Jewels, which currently has six retail stores across India, plans to add 19 new stores by 2012. It will also use the proceeds of the IPO to invest in its diamond processing facility in Mumbai and pump in Rs 25 crore in its Russian subsidiary MB Diamonds. ?We are tapping the IPO market to scale up our operations,? said chairman Nandlal Goenka. The company retails diamond jewellery under brands Ceres and G Wild.
Interestingly, precious metal prices have been hitting new highs on the back of robust demand. ?There is an interest in gold investments from the retail side. People are buying into gold as part of their portfolio diversification and hedging strategy,? said Kuljeet Kataria, VP (commodities), Motilal Oswal. On the exports front, demand for gold for China has been on the forefront for even as the demand in Europe has improved slightly. According to Gem & Jewellery Export Promotion Council, India exported Rs 1.18 lakh crore worth of gems and jewellery during the period between April 2009 and February 2010.