Kalyan Jewellers stock zooms over 8% on large block deals, up 440% in 15 months

Shares of Kalyan Jewellers India, one of India’s largest jewellery companies, surged by 8.3% in early morning trading, reaching ₹589.45 per share, following reports of five large block deals totalling ₹3,585 crore on August 22.

It was reported that approximately 6.6 crore shares, representing a 6.4% stake in the jewellery company, were exchanged at a floor price of ₹539 per share today. Highdell Investment is likely to have sold part of its stake to the company's promoter, Trikkur Sitarama Iyer Kalyanaraman.

Details of the Share Purchase Agreement

On Wednesday, Kalyan Jewellers informed investors that a Share Purchase Agreement (SPA) was executed on August 21, 2024, between Highdell Investment Ltd. and the promoter of Kalyan Jewellers India Limited. Under the SPA, Highdell will sell 24,299,066 equity shares, representing 2.36% of the company's share capital, to the promoter at a purchase price of ₹535 per share, amounting to ₹1,300 crore.

Following the transaction, the promoter and promoter group’s shareholding in Kalyan Jewellers will increase from 60.59% to 62.95%. At the close of Q1 FY25, Highdell Investment's stake in the company had decreased significantly to 9.17%, down from 17.59% in the same quarter of the previous fiscal year.

For the quarter ending in June, the company reported strong performance, with consolidated revenue from operations rising 29% year-over-year to ₹468 crore. Consolidated net profit also saw a 28% increase year-over-year, reaching ₹165 crore.

Customer acquisition remained robust, with new customers accounting for over 35% of the total. During Q1 FY25, the company expanded by adding 13 new showrooms across India. Same-store sales growth (SSSG) was 13% in the South and 11% in non-South regions. The growth in studded jewelry surpassed that of gold, with a studded share increasing to over 30% compared to 29% YoY.

The company is one of the largest jewellery retail chains in India, with a strong network of over 217 stores across the country. At first, the company focused more on the company-owned stores to establish its brand name, even in the newer markets. After achieving success, it has implemented a franchise model since 2023 and expanded to 76 stores by FY24.

The company is further leveraging its brand by extensively expanding across Indian markets, with 80 new stores being opened in FY25 through the franchise route. The asset-light expansion will generate the necessary cash flows to repay its debt in India ( ₹6 billion) over the next two years, as per the analysts. Over the last 15 months, the company shares have risen 440%. 

In June, domestic brokerage firm Motilal Oswal initiated coverage on the stock with a target price of ₹525 apiece. The brokerage is optimistic about the jewellery sector as it believes consumers are increasingly shifting towards organized players.

In FY18, the jewellery market was valued at USD 48–50 billion, with the organized market accounting for a 20–22% share. From FY18 to FY24, the total market reported a CAGR of 9–10%, while the organized market registered a CAGR of over 17%. The past three years have been especially strong for the industry, which saw a 20%–30% value growth for the total and organized market segments.

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