Manoj Jewellers BSE SME IPO review (Avoid)

•    The company is engaged in retailing and wholesaling of gold jewellery and ornaments.
•    It operates from two stores in Chennai.
•    It marked growth in its top and bottom lines for the reported periods.
•    The sudden boost in its top and bottom lines from FY24 onwards raise eyebrows and concern over its sustainability as it operates in a highly competitive and fragmented segment.
•    Based on its financial data, the issue appears fully priced. 
•    There is no harm in skipping this fully priced “High Risk/Low Return” bet.

ABOUT COMPANY:
Manoj Jewellers Ltd. (MJL) is engaged in the retail and wholesale business of jewellery and ornaments made from gold and diamonds, embellished with precious and semiprecious stones. Its extensive portfolio includes a wide range of items such as rings, earrings, armlets, pendants, gajrahs, nose rings, bracelets, chains, necklaces, bangles, and other wedding jewellery pieces. MJL’s diverse collection caters to various tastes and occasions, offering customers a selection of exquisite pieces to choose from. The company aims to provide high-quality and beautifully crafted jewellery to meet the needs and preferences of our clientele.

As on the date of this Prospectus, it has two showrooms located at No. 59, NSC Bose Road Sowcarpet, Chennai – 600079, Tamil Nadu, India, first floor, No. 59, NSC Bose Road Sowcarpet, Chennai – 600079, Tamil Nadu, India and No 16, Mangalam Mitra Apartments, Ranganthan Avenue, Kilpauk, Chennai – 600010 respectively. The showroom is operated and managed by the Company.

Company's dedication is to maintain high-quality products through strict quality control procedures, timely delivery, and competitive pricing. The company also emphasizes on offering a variety of regular designs and ensuring on-time delivery to valued customers. Additionally, it go to extra mile by getting jewellery hallmarked by a BIS recognized Assaying and Hallmarking Centre. BIS hallmark serves as a mark of conformity widely accepted by consumers, providing them with added confidence in the purity of the company's gold jewellery. Overall, these practices demonstrate the company's commitment to quality, customer satisfaction, and transparency in their operations. As of the date of filing this offer document, it had 14 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 3000000 equity shares of Rs. 10 each at a fixed price of Rs. 54 per share to mobilize Rs. 16.20 cr. at the upper cap. The issue opens for subscription on May 05, 2025, and will close on May 07, 2025. The minimum number of shares to be applied is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on xxx SME. The issue constitutes 33.39% of the post-IPO paid-up capital of the company. The company is spending Rs. 1.30 cr. for this IPO process, and from the net proceeds, the company will utilize Rs. 13.23 cr. for repayment/prepayment of certain borrowings, and Rs. 1.67 cr. for general corporate purposes. 

The IPO is solely lead managed by Jawa Capital Services Pvt. Ltd., and Skyline Financial Services Pvt. Ltd., is the registrar to the issue. Shreni Shares Ltd., is the Market Maker for the company. The issue is underwritten to the tune of 85% by Smart Horizon Capital Advisors Pvt. Ltd. and up to 15% by Jawa Capital Services.

Having issued initial equity shares at par value, the company issued further equity shares in the price range of Rs. 50 – Rs. 100 per share between March 2008, and January 2023. It has also issued bonus shares in the ratio of 18 for 5 in March 2017, 1 for 4 in June 2022, 1 for 10 in June 22, and 1 for 1 in January 2023. The average cost of acquisition of shares by the promoters is Rs. 0.7905, Rs. 7.8846, and Rs. 9.9678 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 5.99 cr. will stand enhanced to Rs. 8.99 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 48.52 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 6.76 cr. / Rs. 0.37 cr. (FY22), Rs. 13.64 cr. / Rs. 0.62 cr. (FY23), and Rs. 43.38 cr. / Rs. 3.24 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 3.77 cr. on a total income of Rs. 42.97 cr. Quantum jump in its top and bottom lines from FY24 onwards raise eyebrows and concern over its sustainability going forward, as it is operating in a highly competitive and fragmented segment.

For the last three fiscals, the company has reported an average EPS of Rs. 3.21 and an average RoNW of 22.21%. The issue is priced at a P/BV of 2.38 based on its NAV of Rs. 22.66 as of December 31, 2024, and at a P/BV of 1.63 based on its post-IPO NAV of Rs. 33.13 per share.

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 9.66. Based on FY24 earnings, the P/E stands at 14.96. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 5.40% (FY22), 4.57% (FY23), 7.48%, (FY24), 8.77% (9M-FY25), and RoCE margins of 10.72%, 14.72%, 30.57%, 30.77% respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown D P Abhushan, Moksh Ornaments, and Shubhlaxmi Jewel, as their listed peers. They are trading at a P/E of 31.0, 13.8, and 12.2 (as of April 30, 2025). However, they are not truly comparable on an apple-to- apple basis. 

MERCHANT BANKER’S TRACK RECORD:
This is the 5th mandate from Jawa Capital in the last two fiscals, including the ongoing one.  From the last 4 listings so far, 2 listed at discount, 1 at par and 1 listed with a premium of 50% on the listing date.