Kalyan Jewellers to come out with IPO

Another leading company from Kerala is coming out with an IPO (Initial Public Offer). This certainly is an encouraging news for Kerala and for the business community in India as a whole as companies and industries are struggling during the COVID-19 era. Kalyan Jewellers, one of the largest jewellers in Kerala, is launching an IPO. The company has filed an application with SEBI for this. Kalyan Jewelers aims to raise Rs.1,750 crore through IPO.

The company is launching the IPO after eight years in the jewellery sector. In December 2012, PC Jewellers was the first jewellery company to sell shares through the primary market. Earlier, Kerala-based leading jewellery retailer Joy Alukas had moved for an IPO. The company later abandoned the move.
Currently, private equity firms such as Warburg Pincus are investing in Kalyan Jewellers. Private equity firms will have the opportunity to sell shares for a better profit if they receive a better premium after listing.

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The reason why Kalyan Jewelers is moving ahead with its IPO move is that the stock market remains strong. The jewellery business is expected to improve in the coming quarters. Shares of companies listed in the sector, such as Titan Industries, have risen sharply over the past three months.

Muthoot Finance is the highest grossing IPO company in Kerala in the last 10 years. The shares of Muthoot are eight times higher than the IPO price. Those who have invested in companies such as Manappuram Finance, Geojit and V-Guard have been able to multiply their wealth many times over.
The best companies in Kerala are not just a few companies listed on the stock exchange. There are a number of private limited companies in Kerala that have net worth larger than these companies. But what these companies are failing to achieve is the ‘value addition’ that public limited companies can achieve. Recognising the importance of this value addition is behind the arrival of a mega issue from Kerala itself.

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As a public limited company, it is necessary to ensure transparency in the operations of the company and to publicly declare the financial position of the company periodically. Due to the lack of interest on the part of many companies in Kerala had earlier been reluctant to go public. Lack of conservative interest in bringing the shares to the public market and concerns about the same had deterred many companies from going public.

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Many companies used to have a business approach that focused only on profit margins. Therefore, they did not pay much attention to growth of the company. The practice of making profits by doing business at a high volume despite low profit margins has only recently become acceptable to many companies. With that, they turned to exploiting the potential of stock sales as the most effective way to raise funds. Following such changes, more public issues can be expected from Kerala in the near future.