Shanti Gold
IPO Size: Rs. 360 cr, Entirely Fresh Issue
- For working capital Rs. 200 cr
- Greenfield capex Rs.46 cr
- Repayment of Rs.17 cr debt, to Saraswat Co-operative Bank (wonder which corporate deals with co-operative banks in 2025!)
Price band: Rs. 189-199 per share
M cap: Rs. 1,435 cr, implying 25% dilution
IPO Date: Fri 25th Jul to Tue 29th Jul 2025, Listing Fri 1st Aug 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Gold Jewellery Wholesaler
Shanti Gold International is a B2B 22-carat gold jewellery manufacturer, generating 3/4th business from South India and 5% from exports. FY25 revenue stood at Rs. 1,106 cr, up 56% YoY, as volume grew 15% YoY to 1,566 kg.
New Plant at Jaipur
As of 31.3.25, company’s jewellery manufacturing capacity stood at 2,700 kg per annum (pa), a sole facility in Mumbai, capacity of which was only 58% utilised in FY25. Company plans a greenfield facility at Jaipur, of 1,200 kg pa capacity, to augment total capacity by 44% or 3,900 kg pa by year-end. As production has grown at only 4% CAGR in past 2 fiscals, with a lot of headroom before touching full utilisation, we wonder the need for a greenfield plant.
Margins Improve Before IPO
Company’s revenue growth has been healthy, from Rs. 428 cr in FY22 to Rs. 1,106 cr in FY25. In a run-up to the IPO, PAT margin expanded from 1% in FY22 to 5% in FY25. PAT stood at Rs. 56 cr in FY25, with an EPS of Rs. 10.3, on an equity of Rs. 54 cr (FV Rs. 10 each). Company’s inventory turnover ratio of 7.5x is healthy. As equity expands post IPO, debt equity ratio of 1.4:1 will moderate to 0.4:1.
Pricing in-between Peers
On m cap of Rs. 1,435 cr, IPO is priced at a PE multiple of 19x, on a historic basis. It will be incorrect to compare Shanti Gold to B2C jewellers and there are a couple of B2B peers, listed on the mainboard:
- Smaller peer RBZ Jewellers’ m cap at Rs. 550 cr on FY25 revenue of Rs. 530 cr, PAT of Rs. 39 cr, 7% net margin, 2x inventory turn, implying a historic PE of only 14x. RBZ grew well in FY25, with revenue up 62% YoY and PAT nearly doubling.
- Larger peer Sky Gold and Diamonds, with Rs. 3,500 cr revenue, 4% net margin and 9x inventory turn, is trading at Rs. 4,500 cr mcap and a historic PE of 33x. It reported 57% YoY growth in Q1FY26 revenue and doubling of PAT, implying TTM PE of 28x.
Thus, Shanti Gold’s pricing is in-between the smaller and larger peers.
On an estimated FY26E EPS of around Rs. 12, current year PE multiple of 17x, is inexpensive, as despite B2B operations, company clocks mid-single digit net margins with healthy working capital management. Rising gold prices are expected to fuel company’s topline growth going forward.
25th Jul 2025 at 09:13 am