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Industry : Diamonds & Gold Jewellery

Motisons Jewellers View all IPOs

Price Band

Rs. 52 – Rs. 55

Motison Jewellers is going public with a Fresh Issue. The issue opens on 18th December 2023.

MOJO CALL

Why

Avoid

MOJO CALL

Avoid

Neutral

Declining Cash flow from Operations and lack of a Pan India presence

Motisons Jewellers is involved in the business of selling gold, diamond and silver jewellery. The company has seen its topline and bottom line grow by 31% and 51% respectively over the last two years. The company derives 80% of its revenue from gold, followed by 11% from diamond and the rest from silver.
Despite this, the company has many concerns such as the company has taken several loans from its promoters and is using most of the proceeds from this issue towards paying these loans back. This is something that won’t go well with investors as their money will not be put to productive use to expand the company.
Another concern is that the company has only 4 stores and all of them in Jaipur indicating that they do not have a pan India presence, this places the company in an inferior position as compared to other listed peers who have stores in multiple locations throughout India.
The biggest concern for the company is its cash flow generation. Despite reporting positive Cash flow from operations in all three years, the company’s CFO has declined over the years due to an increase in Inventory, failure to sell this inventory may further hamper its financials going forward.

Valuation

The company is asking for a PE of 25x and market cap-to-sales of 1.5x which seems modest but considering the multiple issues with this company, we recommend avoiding this IPO.

Issue Details

Issue Opens	18th December 2023
Issue Closes	20th December 2023
Price Band	Rs. 52 – Rs. 55
Issue size (Upper Band)	Rs. 151 Cr
Issue Type	FRESH ISSUE
Market cap (based on upper band)	Rs. 541 Cr
Sales- March 2023 (Rs./Crs)	367 Cr
Net Profit - March 2023 (Rs./Crs)	22 Cr
Industry	Diamonds & Gold Jewellery
Promoters	SANDEEP CHHABRA
Lead Manager	HOLANI CONSULTANTS

Objective of the Issue

Details

Objectives of the Issue – Fresh Issue– Rs. 151 cr

The Objectives of the Offer are for:
1. Funding working capital expenditure
2. Repayment of loans
3. General corporate purposes

List of Shareholders Selling Their Stake

Business Operations

About Company

Motison Jewellers are involved in the selling of gold, diamond and silver jewellery. The company mainly gets its jewellery manufactured by third party and manufactures only 5% of the total products its sells.

Majority of the revenue is derived from Gold jewellery, followed by Diamond and Silver. The company has 4 operational stores under the brand name ‘Motisons’.

The company also derives its revenue from other items such as gold and silver coins, utensils and other artifacts made from gold, silver and other precious metals

Segment Revenue Breakup

Revenue Breakdown by Segment:
Segment	H1FY24	FY23	FY22	FY21
Gold	81%	82%	81%	80%
Diamond	11%	10%	11%	11%
Silver	8%	8%	8%	9%

Financials

Financial Overview

The company’s revenue has grown at a CAGR of 31% over the last two years while net profit grew by 51%.

In FY23, The company’s Return on Capital Employed stands at 30% and has consistently improved in the last two years. It was 21% in FY21.

The EBIDTA margin of the company in FY23 declined marginally in FY23 to 13.5% as compared to 14.6% in FY21. The company did report an EBITDA Margin of 14.5% in the recent quarter.

Financial Performance (Rs/crore)

Rs./Crs	H1 FY24	FY 23	FY 22	FY 21
Sales	87	367	314	213
Net Profit	5	22	15	10