Senco Gold, a famous jewellery player in eastern India, launched its initial public offering on Tuesday and will be accessible for public bids until July 6.
The company received Rs 121 crore in the anchor round prior to the IPO, with participation from major investors such as Nippon MF, White Oak, Jupiter asset management, Bandhan MF, and 3P India Equity Fund, among others. Prashant Jain owns 3P India Equity Fund.
The company is offering its shares at a price range of Rs 301-317 a share, with investors able to bid a minimum of 47 shares per lot.
Most analysts recommended that investors subscribe to the issue based on its strong financials and fair prices.
“We have kept a conservative valuation for the IPO, since we wanted to keep a buffer for investors to earn once the stock is listed. The markets have started rising in recent days, but our IPO pricing process has been done over a year,” said Suvankar Sen,MD and CEO, Senco Gold.
Senco Gold is offering at a P/E of 15.5x its FY23 earnings at the upper price band of Rs 317, which is lower than industry peers’ valuations, according to Geojit Financial Services, which assigned the offer a “subscribe” recommendation.
Senco Gold has a large retail network of 136 showrooms (75 company-owned and 61 franchised), with locations in 13 states/UTs and 96 cities. However, West Bengal is home to around 63% of the company’s showrooms.
The company specializes in the selling of gold and diamonds, but it also has a large collection of jewelry made of silver, platinum, precious and semi-precious stones, and several other metals. Its topline and bottomline have increased at 19% and 20% CAGRs over the last three years, respectively.
“A strong brand name and a legacy of over five decades, strong company-operated showrooms, and an established asset-light ‘franchise’ model are expected to benefit the company,” Geojit said.
While the company’s financials have improved over the last two years, Reliance Securities believes that its greater concentration on the Eastern region offers challenges.
According to the brokerage, market growth presents a potential for the organization to expand in the future. “The current valuation provides limited upside.” We believe it is roughly appropriately valued.”
“Among peers, the company has demonstrated one of the best financial performances.” As a result, we assign Subscribe for listing gain based on current performance. Senco commands a P/E multiple of 13.9x (on FY23 EPS on upper price band), which is lower than the peer average,” according to SMIFS.
SBI Securities believes that the company’s strong legacy in the jewelry industry will enable it to expand its market position in other sections of the country.
The IPO is a hybrid of a fresh issuance and an OFS part. The new equity offering is worth Rs 270 crore, while the OFS portion is worth up to Rs 135 crore.
The net proceeds from the fresh issuance will be used to support working capital, with the remainder used for general company purposes. Approximately 50% of the net offer is designated for the QIB category, 15% for the NII category, and 35% for the retail category.
The net proceeds of the offering will be utilized to meet the company’s working capital requirements as well as other general corporate objectives.
The issue’s book running lead managers are IIFL Securities, Ambit, and SBI Capital Markets, with KFin Technologies serving as the registrar.