Ahead of the IPO, the company has raised Rs 121 crore in the anchor round, which saw participation of marquee investors including Nippon MF, White Oak, Jupiter asset management, Bandhan MF, 3P India Equity Fund among others. 3P India Equity Fund is owned by Prashant Jain.
The company is offering its shares in the price range of Rs 301-317, and investors can bid a minimum of 47 shares in 1 lot.
Most analysts advised investors to subscribe to the issue on robust financials and reasonable valuations.
“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.
At the upper price band of Rs 317, Senco Gold is available at a P/E of 15.5x its FY23 earnings, which is lower than industry peers’ valuations, Geojit Financial Services said, while assigning a “subscribe” rating to the offer.
Senco Gold company boasts an extensive retail network of 136 showrooms (75 company-owned and 61 franchised), with store networks in 13 states/UTs across 96 cities. However, around 63% of the company’s showrooms are located in West Bengal.
Specialising in the sale of gold and diamonds, the company also offers an extensive selection of jewellery crafted from silver, platinum, precious and semi-precious stones, and various other metals. Its topline and bottomline has grown at a three-year CAGR of 19% and 20% 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 2 years, its higher concentration in the Eastern region poses challenges, according to Reliance Securities.
The brokerage went on to say that the market growth provides an opportunity for the company to expand going ahead. “Current valuation leaves limited upside. We believe it is more or less fairly valued.”
“The company has demonstrated one of the best financial performances among peers. Hence, based on current performance, we assign Subscribe for listing gain. At a higher price band, Senco is commanding a P/E multiple of 13.9x (on FY23 EPS on upper price band), which is lower than the peer average,” said SMIFS.
SBI Securities believes the company’s strong legacy in the jewellery business allows it to grow market position in other parts of the country.
The IPO is a combination of fresh issue and OFS portion. The fresh equity issue is of Rs 270 crore and the OFS segment aggregates up to Rs 135 crore.
Of the fresh issue net proceeds, Rs 196 crore will be utilised for funding working capital and residual for other general corporate purposes. About 50% of the net offer is reserved for the QIB portion, 15% for NII category and 35% for the retail portion.
The net proceeds from the issue will be used for funding working capital requirements of the company and other general corporate purposes.
IIFL Securities, Ambit and SBI Capital Markets are book running lead managers to the issue, while KFin Technologies is the registrar.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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