Pushpa Jewellers NSE SME IPO review (May apply)

•    The company is in the wholesale business of gold and traditional jewelleries in B2B segment.
•    Currently it has 4 showrooms and expanding 1 more showroom at Vijayawada.
•    The management claims to be the pioneers in light weight jewelleries.
•    Based on its recent set of financials, the issue appears fully priced. 
•    Well-informed investors may park moderate funds for medium to long term.

ABOUT COMPANY:
Pushpa Jewellers Ltd. (PJL) is a wholesale B2B jewellery maker with a presence across India. Its jewellery business includes the sale of wide range of Traditional and Modern Gold jewellery. The company’s main focus is in detailing and highlighting small areas minutely as its jewellery consists of some of the world’s finest stones namely Emerald, Jade, Pearl and Meena. It has a presence across multiple regions in India and also exports jewellery in international markets like Dubai, United States and Australia. PJL’s story is woven into each piece of gold jewellery it creates. With a legacy spanning decade, it has honed craft to perfection, bringing forth a diverse array of intricately designed necklaces, bracelets, earrings and rings. Each piece is a testament to its commitment to preserving rich heritage while embracing modern aesthetics.

Currently, it has three branches which are office cum showrooms in India, situated in Hyderabad, Bangalore, and Chennai. PJL plans are to expand further by establishing more additional showrooms or branches in key locations such as Vijayawada. It takes pride in exporting jewellery to international markets including Dubai, Australia, and the United States. With this the company is involved in sales which is selling products to other businesses rather than individual consumers. This typically includes selling in bulk to retailers, wholesalers, or other corporations who may use the jewellery as part of their product line.

It integrates the design and creation processes within the organization to enhance efficiency and creativity by managing the entire process internally, from conceptual design to final production, it ensures tighter quality control, quicker turnaround times, and a more cohesive brand vision. In-house design allows for close collaboration between designers and production teams, fostering innovation and immediate adjustments based on feedback or market trends. Streamlined production further optimizes operations by minimizing external dependencies, reducing lead times, and improving cost-efficiency. This facilitates a more agile response to market demands and ensures that the final product aligns closely with the original design intent, resulting in high-quality gold jewellery that meets or exceeds customer expectations.

PJL is a wholesale gold jewellery manufacturer, specializing in crafting high-quality jewellery that aligns with diverse customer preferences. The manufacturing process is predominantly outsourced to skilled job workers, commonly referred to as Karigars, ensuring precision and adherence to design specifications.

The company collaborates with 33 Karigars, all based in Kolkata, West Bengal, a region renowned for its heritage and craftsmanship in jewellery making. By leveraging the expertise and experience of these local artisans, the company achieves superior craftsmanship and intricate designs tailored to varied tastes and preferences. This job-work model allows it to efficiently adapt to evolving market trends while maintaining consistency in quality and design. Except Karigars it doesn’t have any contractual employee. Revenue from necklace products is above 71% on an average for the last three fiscals.

It is currently present in 4 cities with branches but apart from this it sells jewelleries’ PAN India, we export it to 3 countries namely US, Dubai and Australia, with this it is also into corporate sales. Company is multifaceted, revolving around meticulous craftsmanship, strategic sourcing, and effective market positioning. At its core, it focuses on designing and creating high-quality jewellery pieces that cater to diverse consumer tastes and preferences. As of March 31, 2025, it had 90 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of 6711000 equity shares of Rs. 10 each to mobilize Rs. 98.65 cr. at the upper cap. It has announced a price band of Rs. 143 – Rs. 147 per share. The issue constitutes 5370000 fresh equity shares (worth Rs. 78.94 cr. at the upper cap), and an Offer for Sale (OFS) of 1341000 equity shares (worth Rs. 19.71 cr. at the upper cap). The issue opens for subscription on June 30, 2025, and will close on July 02, 2025. The minimum number of shares to be applied is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.71% of the post-IPO paid-up capital of the company. From the net proceeds of the fresh equity shares, it will utilize Rs. 1.90 cr. for capex on new showroom, Rs. 3.46 cr. for capex on inventory of new showroom, Rs. 45.39 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Affinity Global Capital Market Pvt. Ltd., and Cameo Corporate Services Ltd., is the registrar to the issue. Sunflower Broking Pvt. Ltd. is a market maker. The issue is underwritten to the tune of 49.31% by Affinity Global Capital and 50.69% by Black Fox Financial Pvt. Ltd.

Having issued initial equity shares at par value, the company has issued further equity shares in the price range of Rs. 100 – Rs. 112 between February 2010, and August 2016. It has also issued bonus shares in the ratio of 80 for 1 in June 2024. The average cost of acquisition of shares by the promoters/ selling stakeholders is Rs. 1.48, and Rs. 2.64 per share. per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 18.85 cr. will stand enhanced to Rs. 24.22 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 356.08 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 165.84 cr. / Rs. 8.14 cr. (FY23), Rs. 255.49 cr. / Rs. 13.58 cr. (FY24), Rs. 281.27 cr. / Rs. 22.29 cr. (FY25). Its 60+% revenue comes from light weight jewelleries where it has created a niche place and is pioneer, as claimed by the management.

For the last three fiscals, the company has reported an average EPS of Rs. 9.03 and an average RoNW of 37.75%. The issue is priced at a P/BV of 4.77 based on its NAV of Rs. 30.83 as of March 31, 2025, and at a P/BV of 0.90 based on its post-IPO NAV of Rs. 163.22 per share (at the upper cap). Here appears to be some mismatch on its post-IPO NAV data.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 15.59. Based on FY24 earnings, the P/E stands at 26.20. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 4.91% (FY23), 5.32% (FY24), 7.93%, (FY25), and RoCE margins of 21.84%, 30.62%, 27.84%, 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, based on its financial performance and future prospects.

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Sky Gold and Khazanchi Jewellers as their listed peers. They are trading at a P/E of 36.1 and 31.3 (as of June 27, 2025). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
This is the 6th mandate from Affinity Global in the last three fiscals including the ongoing one.  From the last 4 listings, 1 listed at par and the rest with a premium ranging from 18.18% to 51.79%, on the listing date.