Joyalukkas’s strong foothold in south India makes it a better performer than most of the country’s top players

• Jewellery retail chain Joyalukkas India has filed draft papers with SEBI to raise around ₹2,300 crore via IPO.
• 60% of the IPO proceeds will be used towards paying debt, then some for opening new stores.
• As of February 28, 2022 the company has total outstanding borrowings of ₹1,524 crore.

Kerala-based jewellery retail chain Joyalukkas India is in the process of going public. The company intends to raise around ₹2,300 crore with fresh issue of shares. About 60% of the initial public offering (IPO) proceeds will be used towards paying debt, then some for opening new stores.

As of February 28, 2022 the company has total outstanding borrowings of ₹1,524 crore. It plans to add 8 new showrooms over the next 2 years across Telangana, Maharashtra, Odisha and Karnataka.

Joyalukkas India sells jewellery made of gold, studded and other jewellery products that include diamond, platinum, silver and other precious stones. The company has a strong foot in the southern states with 92% of its revenue coming from the southern part of India.

The company operates 85 showrooms under the “Joyalukkas” brand located across 68 cities in India and mostly in South India. “We are currently present in most parts of the southern region and intend to deepen our penetration in such regions, where there could be potential for further expansion due to the demand of jewellery in the region,” said the company in DRHP.

Moreover, southern Indian states make up 40% of the Indian gold jewellery market while the eastern states account for 15%, according to the firm’s DRHP. It also mentions that gold worn by a bride in Kerala is more than double the weight of gold worn by a bride in Gujarat because of varied culture.

It ranks sixth in terms of number of showrooms compared to its peers.
Its main competitors include GRT Jewellers, Kalyan Jewellers India, Malabar Gold, PC Jeweller, Thangamayil Jewellery, Titan Company (Tanishq), and Tribhovandas Bhimji Zaveri.

Interestingly, the company’s revenue per store and even sales per square feet is commendable compared to many offline players out there.
(Source: Draft red herring prospectus)

However, the company’s profits have been dipping in the last three years financial years due to high competition. “Our company faces competition from existing jewellery retailers, both organised and unorganised, and potential entrants to the jewellery retail industry that may adversely affect our competitive position and our profitability,” the company said in its draft red herring prospectus (DRHP).
(Source: Draft red herring prospectus)

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