RO Jewels IPO

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(i) The company is engaged in the wholesale business of gold and silver chains.

(ii) They procure gold & silver majorly through the bullion market and partially from the local markets in Ahmedabad. They purchase only readymade Chains and other jewelry from the jewelry manufacturers or independent jewelry wholesalers located in Ahmedabad and Mumbai. These are then sold through its showroom situated at Manek Chowk, Ahmedabad.

(iii) They have a diversified portfolio for chains and jewelry that cater to our customer’s taste, preference, choice, and the ever-changing trends in the chain and jewelry designs. The portfolio offers our customers a wide variety of traditional, Indo-western, & modern chains and jewelry.

InvestorZone Take

(i) It is a simple business of trading, wherein company purchase gold chains from the bullion market and sell it from their shop.

(ii) No moat in the business.

Objects of the RO Jewels IPO:

The Net Proceeds from the Issue are proposed to be utilized by the Company for the following objects: 1) Additional Working Capital. 2) General Corporate Expenses. 3) To meet the expenses of the Issue.

RO Jewels IPO Details:

Open Date: Mar 12 2020
Close Date: Mar 17 2020
Total Shares: 1365000
Face Value: ₹ 10 Per Equity Share
Issue Size: 4.91 Cr.
Lot Size: 3000 Shares
Issue Price: ₹ 36 Per Equity Share
Listing At: BSE SME
Listing Date: Mar 25 2020

Promoters And Management:

(i) Mr. Shubham Bharatbhai Shah, aged 24 years, is the Managing Director and Chief Financial Officer of the company. He studied 2 years in the field of Masters of Business Administration from L.J. Institute of Management, Ahmedabad. Then he joined his family business of jewelry in the year 2014. (ii) Mr. Bharat Rasiklal Shah, aged 57 years, is the Promoter and Whole Time Director of our company. After completion of matriculation, he has joined the jewelry business in the year 2005.

Financials of RO Jewels IPO:

(i) Revenue a) Rs. 10 Cr in fiscal 6 months ending on September 30, 2019. b) Rs. 4.24 Cr in FY18-19. c) Rs. 9.75 Cr in FY17-18. d) Rs. 5.74 Cr in FY16-17. (ii) Profit after tax: (i) Rs.15.05 Lakhs in fiscal 6 months ending on September 30, 2019. (ii) Rs. 1.49 Lakhs in FY18-19. (iii) Rs. 6.85 Lakhs in FY17-18 (iv) Rs. 5.87 Lakhs in FY16-17. InvestorZone Take: 1. Total Shares outstanding after IPO = 14,67,083+13,65,000= 28,32,083 2. Average PAT of the last 3 years = 4.73 Lakh 3. Average EPS of the last 3 years = 0.16. This we have calculated by taking Average PAT of the last 3 years and shares outstanding post IPO. 4. So, based on an average EPS of 0.16, the company is asking P/E multiple of 225x. 5. The company has a fixed asset of just 10 lakh on books and is trying to raise ~5 Cr from IPO. 6. Company is asking Mcap of 10 Cr, which looks very high.

Recommendation on RO Jewels IPO:

Review and Recommendation of InvestorZone is:1/10

Lead Manager of RO Jewels IPO:

  1. First Overseas Capital Limited

Registrar of RO Jewels IPO:

  1. Kfin Technology Private Limited

Discussion on RO Jewels IPO: