Kalyan Jewellers kicks off its ₹1,175 crore IPO but buyers may want to strap in for the long haul

• Kalyan Jewellers ₹1,175 crore initial public offering (IPO) has opened for subscription and investors can apply till March 18.
• It has a fixed price band of ₹86 to ₹87 per share.
• The IPO comprises fresh issuance of equity up to ₹800 crore and an offer for sale (OFS) worth ₹375.
• The company has already said ₹351.89 from 15 anchor investors at the upper price band of ₹87 per share.

One of India’s largest jewellery companies, Kalyan Jewellers, is making its debut on the market today with the launch of its ₹1,175 crore initial public offering (IPO). The Warburg Pincus-backed company is now open for public subscription as the IPO bonanza, on the Indian bourses, continues.

The company has already raised ₹351.89 crore from 15 anchor investors at the upper price band of ₹87 per share. The Government of Singapore and Monetary Authority of Singapore are some of the key investors in the anchor book.

However, analysts don’t look at Kalyan as a short-term bet. In order to see returns, you’ll have to lock in your money for the long haul. While the brand has strong recall and a pan-India presence, it will take some time for its balance sheets to improve.


Kalyan will use the fresh inflow of funds to fulfil its working capital requirements and for general corporate purposes.

Kalyan Jewellers and its hyperlocal strategy
Kalyan’s biggest strength is its ability to act as a hyperlocal company — catering to a customer’s specific preferences according to the region they live in — with pan-India ambitions. The trusted jewellery brand does this end-to-end. It uses local market expertise to design their pieces and then region-specific marketing strategies to ensure the local residents know about it.

The ‘My Kalyan’ neighbourhood centres are also a part of that. According to Axis Capital, it ‘significantly’ enhances the distribution footprint of the company. “[It] is difficult for their peers to easily replicate and enables Kalyan Jewellers to access India’s large pool of jewellery customers across urban, semi-urban and rural markets,” said the report.

However, this also means that the company faces competition from both the big players — like Titan, which has been listed as a key competitor in the company’s red herring prospectus (RHP) — and the unorganised segment of jewellers in the local space.

The good news is that the number of unorganised players is reducing and is expected to continue to fall. “Organised players will get healthy traction in the coming years due to increased preference for branded jewellery,” said Reliance Securities. “This, along with continued addition of new showrooms is expected to ensure a sustainable growth in the long run.”

Expensive items will always be bought offline
Being in the gold jewellery making business means that you need customers to come to your showrooms.

In fact, Ramesh Kalyanaraman — the company’s executive director — doesn’t see the scope of online shopping ever replacing the offline experience. “People do not want to make high-ticket purchases online,” he told Business Insider in an interview last week.

Being dependent on the offline world, however, also means being resilient against threats like natural calamities and pandemics. Kalyan, on the other hand, has borne the brunt of COVID-19 in 2020 and the Kerala floods, a year prior to the lockdown.


In the nine-months from March to December 2020, the company saw negative cash flows due to people being wary of leaving their homes to mitigate the spread of the coronavirus. Industry reports show that buying of jewellery is now showing recovery as people go from large weddings to smaller venues and redirect that liquidity towards players like Kalyan.

“We believe Kalyan Jewellers would perform better on the back of a strong brand and number of stores in India and internationally,” noted Angel Broking.

Gold is a risky business
Come rain or shine, the demand for gold in India will never be too far behind. After all, India is the biggest market for gold in the world. “Given the forecast improvement in profitability and balance sheet, India’s appetite for gold, strong presence, brand recall and diversified product offering, we assign a “subscribe” rating on a long-term basis,” said Geojit Financial Services.

According to Reliance Securities, the firm’s focus on increasing revenue contribution from high-margin studded jewellery is expected to improve its overall margin as well.

Kalyan Jewellers already dominates in South India with more than half its revenue coming from that region. But, it has over 100 showrooms located across 21 other states in the country. Internationally, it has another 30 showrooms in the Middle East.

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