Motisons Jewellers makes blockbuster debut, shares list at 98% premium
Motisons Jewellers, a family-owned jewelry retail company based in Jaipur, made a blockbuster entry in the stock market on December 26. The stock opened at Rs. 109 against the IPO price of Rs. 55, giving a 98% return to its investors. The company's Rs. 151 crore public issue was subscribed 159.61 times. High net-worth individuals picked 233.91 times the allotted quota, qualified institutional buyers 157.40 times and retail investors 122.28 times.
How the company plans to utilize IPO proceeds
Motisons Jewellers IPO was entirely a fresh issue of 2.75 crore shares. The Chhabra family-owned jewelry retail company plans to use the net proceeds to repay debt (Rs. 58 crore) and meet working capital requirements (Rs. 71 crore). The remaining proceeds will be used for general corporate purposes. The company has shown strong revenue growth over the past three years, with net profit doubling in the last two years and revenue increasing by 16.5% in the year ended March FY23.
How does the company's financial performance look like?
In the fiscal year ending in March FY23, net profit surged by 50.5% to Rs. 22.2 crore and revenue soared by 16.5% to Rs. 366.2 crore compared to the previous year. EBITDA showed a 26.9% year-on-year growth to Rs. 49 crore, achieving a margin expansion of 109 basis points, reaching 13.37%.
Risks and promoter investigations
Despite the successful debut, potential risks should not be overlooked. All four of Motisons Jewellers' showrooms are located in Jaipur, making the company vulnerable to regional developments that could negatively impact its business and financial performance. Additionally, promoters Sanjay Chhabra and Sandeep Chhabra have faced investigations for alleged betting in IPL cricket matches and have been involved in SEBI investigations for allegedly entering into non-genuine trades.
