Bluestone Jewellery
IPO Size: Rs. 1,541 cr
- Fresh Issue of Rs. 820 cr for working capital of Rs. 750 cr
- Offer for Sale (OFS) of Rs. 721 cr by 5 PE investors (32% combined stake to drop to 18% post IPO)
Price band: Rs. 492 to Rs. 517 per share
M cap: Rs. 7,823 cr, implying 20% dilution
- 75% reserved for institutions and only 10% for retail, as company is loss making
IPO Date: Mon 11th Aug to Wed 13th Aug 2025, Listing Tue 19th Aug 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Direct to Consumer (D2C) Omni-Channel Jewellery Brand
Bluestone Jewellery is a 14 year ago jewellery retailer, garnering 6% of Rs. 1,800 cr revenue online and balance through 275 physical stores (200 company-owned, 75 franchise). Although Bluestone is digital-first, it is actually competing with traditional jewellers and has hence doubled store count in past 2 years, leading to 52% revenue 52% CAGR between FY23-FY25. Having opened 83 new stores in FY25, it plans to add 290 new stores till FY27E, mainly in tier 2/3 towns, to ensure 30-35% topline growth going forward.
Inventory Turnover Deteriorating
Aggressive new store expansion requires stock in hand. But rapid expansion deteriorated operating performance, halving average inventory turnover ratio from 2.7x in FY23 to a mere 1.3x in FY25. Thus, on Rs. 1,770 cr revenue of FY25, closing inventory was at Rs.1,653 cr, as of 31.3.25.
Inventory is the single biggest make-or-break for any retailer, and Bluestone’s inventory position is declining rapidly. Most listed retailers such as Titan, Kalyan, PN Gadgil, Thangamayil operate at over 2.5x inventory turn.
Huge Overheads
Bluestone’s mix of studded jewellery is as high as 68% (Titan 27%, Kalyan 30%) resulting in an industry-leading gross margin of 38%, as against 10-20% for listed peers.
But its store productivity (revenue per store) has remained stagnant at Rs.6 cr, per store per, annum since FY22. Also, huge marketing and other overheads leads to EBITDA per store of mere at Rs. 55 lakh, against Rs. 2.2 cr for Senco, Rs. 3.5 cr for Thangamayil and Rs. 5 cr for Kalyan.
This EBITDA is before accounting for rent payment under IndAS accounting. FY25’s EBITDA was reported at Rs. 128 cr. Deducting Rs. 100 cr rent expenses for 275 stores, operating profit is mere at Rs. 30 cr, on Rs. 1,770 cr topline, implying 1.7% operating margin. This widened FY25 net loss to Rs. 220 cr, from Rs. 142 cr in FY24.
There remains no visibility of FY26 profit, with even FY27 being iffy.
More Capital sought to chase Expensive Growth
On FY26E expected revenue of Rs. 2,400 cr, revenue multiple translates to 3.6x, but poor operating margins make topline based valuation incorrect.
In the past 13 years, company has raised ~Rs. 1,820 cr in capital, yet revenue is just Rs. 1,770 cr, implying a poor capital efficiency <1x. Now, another Rs. 820 cr primary capital is sought to be raised, to chase expensive growth.
Last fund raise of Rs. 600 cr in Sep 2024 was done at Rs. 578 per share. But, inventory turn has since deteriorated, widening losses. Thus last transaction price should not be benchmark for IPO.
Uncomforting Cap Table
Due to heavy dilution undertaken over the years, promoter holding is just at 18% currently, of which, 37% is pledged (invested Rs. 75 cr primary in Dec 2024). Post IPO, promoter holding will drop to 16%, and only 10% promoter holding will be unencumbered, implying huge risk.
Also, 15+ financial investors, having invested at different points of time since 2013, will look to exit at some point of time, creating a situation of excess supply over demand for company’s shares, post listing. Thus, Bluestone is a case of huge selling overhang with less promoter skin in the game, reminding us of the 2021 start-up IPO frenzy!
10th Aug 2025 at 10:42 pm
10th Aug 2025 at 08:23 pm