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Manoj Vaibhav Gems ‘N’ Jewellers IPO Review – About The Company

Company Profile: Manoj Vaibhav Gems ‘N’ Jewellers Limited, also known as Vaibhav Jewellers, is a regional jewelry brand based in South India. Established in 2003, it is led by a first-generation woman entrepreneur in South India.
Product Range: The company offers a wide array of jewelry, including gold, silver, and diamond jewelry, as well as precious gemstones. These products are available both through physical retail stores and online platforms. Presently, Vaibhav Jewellers operates 13 showrooms, spread across 8 towns and 2 cities in Andhra Pradesh & Telangana.
Market Focus: Vaibhav Jewellers caters to diverse economic segments within the micro markets of Andhra Pradesh and Telangana, serving customers in both rural and urban areas. Notably, 77% of its retail showrooms are situated in Tier 2 and Tier 3 cities, addressing the semi-urban and rural demand. The remaining 15% are located in the Mini Metro city of Hyderabad, while 8% are in the Tier 1 city of Visakhapatnam, targeting urban consumers.

Indian Jewellery Retail Sector: In FY2023, the Indian jewelry retail sector reached a valuation of nearly $70 billion. Organized retail, encompassing national and regional players, constitutes approximately 32% of this market. Nonetheless, the unorganized sector, comprising over 500,000 local goldsmiths and jewelers, dominates the remainder. The jewelry retail market is projected to expand to approximately $124 billion by FY27.
Regional Markets: By FY 2023, the jewelry market size for Andhra Pradesh and Telangana stood at $3.3 billion and $2.8 billion, respectively. The Andhra Pradesh jewelry market is anticipated to grow to $6.3 billion by FY27, registering a CAGR of 18%. Similarly, the Telangana market is expected to reach $5.3 billion during the same period, with a CAGR of 18%.
Rural Market Significance: In FY 2023, the rural market accounted for 50-52% of the total jewelry market in Andhra Pradesh and Telangana. Within this segment, 60-70% of jewelry demand was driven by weddings, followed by investment needs post-harvest.
Organized Market Growth: The organized sector contributed 39% to the overall jewelry market in Andhra Pradesh and Telangana in FY 2023. This share is forecasted to increase to 45% by FY 2027. The present organized market, valued at $2.35 billion, is projected to grow at a CAGR of 22% to reach $5.21 billion by FY2027.

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Financial Overview: Analyzing Manoj Vaibhav Gems ‘N’ Jewellers’ financials, it’s evident that their total assets have grown from ₹803.10 crores in March 2021 to ₹1,082.82 crores in June 2023.
Revenue Growth: Their revenue has also increased from ₹1,443.18 crores in March 2021 to ₹2,031.30 crores in March 2023. Notably, the company’s net profit has tripled from ₹20.74 Crores in March 2021 to ₹71.60 Crores, with a net profit margin currently standing at 3.53%.
Recent Performance: During the June quarters of FY24, the company reported a total revenue of ₹510.21 crores and a net profit of ₹19.24 crores.
Return Ratios: In terms of return ratios, Manoj Vaibhav Gems ‘N’ Jewellers boasts a ROE (Return on Equity) of 23.19% and a RoCE (Return on Capital Employed) of 17.71% as of FY23. These ratios indicate a strong return on shareholders’ capital and efficient resource utilization within the company.

Market Share: The company commands a significant market share, holding 4% of the jewelry market in Andhra Pradesh and Telangana. Moreover, it captures a substantial 10% of the organized market in these states as of FY2023.
Regional Focus: Manoj Vaibhav Gems ‘N’ Jewellers is strategically concentrated in the micro markets of Andhra Pradesh and Telangana. Its commitment to expanding within these states enables it to effectively cater to the preferences and demands of the local population.
Early Mover Advantage: The company leverages its early mover advantage in Andhra Pradesh, conducting thorough market research, assessing surroundings, and understanding consumer preferences before opening new retail showrooms. This proactive approach ensures positive business growth in new locations.
Rural Market Emphasis: Recognizing that approximately 42% of gold jewelry demand emanates from Urban India, the company places a strong emphasis on bolstering its presence in the Rural Market.
Effective Go-To-Market (GTM) Strategy: The company follows a Go-To-Market (GTM) model that has facilitated the development of robust connections and enduring customer relationships. This, in turn, fosters repeat business for the company.

Raw Material Challenges: The unavailability or high cost of quality gold bullion, diamonds, silver, and other precious and semi-precious stones can have an adverse impact on the company’s operations.
Working Capital Requirements: To sustain its operations, the company requires substantial working capital. The inability to secure such capital can potentially hinder its business activities.
Regional Dependency: The company’s business operations are primarily confined to the states of Andhra Pradesh and Telangana. This regional concentration increases the company’s exposure to risks associated with competition, demographic shifts, economic fluctuations, and unforeseen force majeure events in these states.
Intense Competition: Operating in a highly competitive market, the company faces competition from other jewelry retailers, both within the organized and unorganized sectors.
Raw Material Price Volatility: The company is susceptible to the unavailability and price fluctuations of the raw materials it utilizes in its product offerings.