Divine Hira Jewellers
- Divine Hira Jewellers is coming out with an initial public offering (IPO) of 35,37,600 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 90 per equity share.
- The issue opens on March 17, 2025 and will close on March 19, 2025.
- The shares will be listed on NSE SME Platform.
- The share is priced at 9.00 times higher to its face value of Rs 10.
- Book running lead manager to the issue is Horizon Management.
- Compliance Officer for the issue is Jai Dilip Shrimankar.
Profile of the company
Divine Hira Jewellers is engaged in the business of designing and marketing of gold jewelleries. It mainly deals in 22 Karat gold jewellery, offering a wide variety of designs to suit preferences of the end customer. It has the ability to create localised product design mixes to suit various regional tastes. It caters to its customers’ unique preferences, through its understanding of the local and regional market. It provides an extensive range of designs. It is engaged in wholesale of gold jewellery, silver articles, bullions and coins at Mumbai, Maharashtra. Recently, it is also curating and offering exquisite antique gold jewelry that transcends time, bringing the charm of historical artistry into the modern era. Currently, it caters to a large number of wholesalers, showrooms and retailers who buy its products in bulk quantities.
It procures the required gold from bullion dealers and importers. Recently, it is in the process to start importing gold directly. It does not have its own manufacturing facility and it outsources the work of making jewellery and ornaments to various artisans with whom it has developed relationships. It offers a large variety of handcrafted jewellery, which are designed by its in-house designers in close collaboration with skilled local craftsman located across the country. Due to its diversity of clients and the varied regions each of its clients cater to, it has developed an ability to design its jewellery products as per latest trends, fashion and demographic preference of the end customers. It offers a wide range of products from gold jewellery for special occasions such as weddings and festivals to daily wear jewellery for all ages, genders and across various price points. It caters to a variety of customers across mid-market and value market segments and its products are designed by its in-house team of creative designers and also certain freelance designers, allowing it to manage a large and diverse portfolio of designs.
The company primarily sells gold jewelry and its product range includes machine made, handmade & plain gold jewelry like necklace, mangalsutra, chains, malas, rings, pendants, bracelets, bangles, kada, coins and other wedding jewelleries. The designing and job work of its products is done either in house or by third parties on job work basis. Its primary focus has been on purity and commitment.
Proceed is being used for:
- Prepayment or repayment of certain loans availed by the company
- Funding of working capital requirements of the company
- General corporate purposes
Industry Overview
India experienced a significant decline in its gems and jewellery exports by 14.94%, amounting to $32.02 billion in the fiscal year 2023-24 compared to $37.6 billion in the previous year. The gem and jewellery sector saw a decline of 12.17% in rupee terms and 14.94% in dollar terms, totaling Rs. 265187.95 crore and $32.02 billion, respectively. Import figures also reflected a decrease, with a decline of 11.09% in rupee terms and 13.84% in dollar terms, amounting to Rs 184355.48 crore and $22.26 billion, respectively. The export of cut and polished diamonds significantly dropped by 27.58%, totaling $15.96 billion, while imports showed a substantial growth of 46.12%, reaching $1911.0 million. Conversely, gold jewellery exports exhibited a positive growth rate of 16.97%, amounting to $11140.780 million, attributed partly to increased exports facilitated by free trade agreements with UAE and Australia. Silver jewellery exports experienced a notable decline of 45%, while platinum jewellery exports surged by 449.52%. Coloured gemstone exports demonstrated a growth rate of 13.94%, reaching $478.68 million.
For the FY 2023-24, exports of Plain Gold Jewellery grew by an impressive 61.72% to $6792.24 million as compared to $4199.96 million in FY 2022-23. Total Gold jewellery (plain & studded jewellery), which experienced a 10.47% decline between April 2023 to September 2023, rebounded strongly in the latter half of the year, achieving a growth of 46.91%. The UAE emerged as a significant market for plain gold jewellery exports from India, experiencing remarkable growth of 107.2% to reach $4,528.66 million in FY 2023-24, compared to $2,185.67 million in the previous year. Markets of UAE & Bahrain accounted for over 85% of India’s plain gold jewellery exports. Australia also witnessed a growth of 37% in plain gold jewellery exports attributing its growth to the India-Australia ECTA. Gross export of total Gold Jewellery (both Plain & Studded) for the FY 2023-24 grew 16.75% to $11230.18 million over the comparative figure of $9618.80 million for previous year.
In the coming years, growth in the gems and jewellery sector would largely be contributed by the development of large retailers/brands. Established brands are guiding the organised market and are opening opportunities to grow. Increasing penetration of organised players provides variety in terms of products and designs. Also, the relaxation of restrictions on gold import is likely to provide a fillip to the industry. The improvement in availability along with the reintroduction of low-cost gold metal loans and likely stabilisation of gold prices at lower levels is also expected to drive volume growth for jewellers over the short to medium term. India has 450 organised jewellery manufacturers, importers & exporters and is the hub for jewellery manufacturing. These players have benefited greatly due to the increasing liberal policies by the government. The demand for jewellery is expected to be significantly supported by the recent positive developments in the industry. India’s gems and jewellery industry is expected to reach $100 billion by 2027.
Pros and strengths
Wide range of products: The company’s product portfolio consists of wide range of jewellery which differentiate it from local jewellers. Its portfolio offers its customers a wide variety of traditional, Indo-western and modern jewelleries. Its product portfolio includes necklace, mangalsutra, Chains, malas, rings, pendants, bracelets, bangles, kada, coins and other wedding jewelleries and also makes customized jewelleries for weddings and customized designs as per orders.
Hallmarking and unique identification: Each piece of its jewelry is meticulously hallmarked to ensure its authenticity and quality. As part of this process, it assigns a unique HU ID number to every item. This unique identification number guarantees traceability and provides its customers with confidence in the purity and origin of their jewelry. By integrating this hallmarking system, it upholds the highest standards of trust and transparency in its craftsmanship.
Design innovation for customers: The company takes pride in its ability to innovate jewelry designs tailored to its customers’ preferences and needs. Its in-house design team works diligently to create unique and captivating pieces. From initial design concepts to final manufacturing, it provides an end-to-end service that ensures each piece of jewelry is crafted to perfection. This comprehensive approach guarantees that its customers receive exceptional and personalized products, reflecting the latest trends and timeless elegance.
Risks and concerns
Substantial revenue comes from limited customers: The company currently derives its entire operational revenues from sale of gold and silver jewellery in the domestic market. It depends on a limited number of customers for a significant portion of its revenues. The company has garnered 95.51%, 86.98% and 71.07% of its total revenue in FY24, FY23 and FY22 respectively. Any perceived decline in its quality standards, growing competition and any change in demand may adversely affect its ability to retain or acquire customers and consequently affect its financials. It cannot assure that it shall generate the same quantum of business, or any business at all from its top customers, and any loss of business from one or more of them may adversely affect its revenues and results of operations.
Income and sales are subject to seasonal fluctuations: The industry has seasonal increases and decreases in revenues and profitability, corresponding with weddings and festivals. The company’s sales have historically exhibited certain seasonal fluctuations, reflecting higher sales volumes on festivals and other occasions such as Durga Puja, Akshay Tritiya, Dhanteras, Diwali and Christmas which occur in the third and fourth quarter of the fiscal year. This period also coincides with the wedding season in India. While it stocks certain inventory to account for this seasonality, its fixed costs such as employee salaries, Office operating costs and logistics-related expenses, which form a significant portion of operating costs, are relatively constant throughout the year. Consequently, lower than expected net sales during the third or fourth quarters of the fiscal year or more pronounced seasonal variations in sales in the future could have a disproportionate impact on its operating results for the fiscal year, or could strain its resources and impair its cash flows.
Geographical constrain: The company’s operations are based out of limited region like Maharashtra, Karnataka, Gujrat and Chhattisgarh. Exposure to projects in new geographies may not be as profitable as its current geographies. Its geographic concentration may have a material adverse effect on its business, results of operations and financial condition. Further, it derives a significant portion of its revenue from a limited number of customers. As its business is currently concentrated to a selected number of geographies, any adverse development with such customer, including as a result of a dispute with such major customers, may result in it experiencing significant reduction in its cash flows and liquidity. If its customers are able to fulfil their requirements through any of its existing or new competitors, with better services and / or cheaper cost, it may lose significant portion of its business.
Outlook
Divine Hira Jewellers specializes in designing and marketing premium 22 Karat gold jewelry. The company caters to wholesalers, showrooms, and retailers with a diverse range of gold jewelry that combines traditional artistry with modern elegance. It has established brand presence and attracts both wholesalers and retailers. It has portfolio of 22 Karat gold jewelry: necklaces, bangles, chains, rings, pendants, and wedding collections. On the concern side, the substantial portion of its revenues is dependent on few customers and the loss of, or a significant reduction in purchases by any one or more such customers could adversely affect its financial performance. Moreover, the company operates in limited geographies for a significant portion of its revenue and also depends on limited number of customers for its revenue from operations. Projects in new geographies may not be as profitable as in existing geographies.
The company is coming out with an IPO of 35,37,600 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 90 per equity share to mobilize Rs 31.84 crore. On performance front, revenue has decreased 25.64% from Rs 24,644.59 lakh in the fiscal year ended March 31, 2023 to Rs 18,325.61 lakh in the fiscal year ended March 31, 2024. The decrease in revenue was on account of decrease in sale of bullion and silver products as these products were of low margin, and the aim was to focus on high margin products. Moreover, the net profit has increased 62.41% from Rs 91.22 lakh in the fiscal year ended March 31, 2023 to Rs 148.17 lakh in the fiscal year ended March 31, 2024.
The company’s marketing personnel regularly participate in exhibitions and trade fairs where they come across various new designs. These designs are forwarded to its in-house designers who improve upon it according to latest trends and requirements. Its in-house designers also come up with their own designs and ideas which are showcased to its regular customers. The customers in the jewellery world are discerning, knowledgeable and demanding. It brings innovative ideas and designs to its customers on a regular basis. The company intends to continue to add new designs to its jewellery portfolio by regularly participating in exhibitions and trade fairs. Recently, it is also curating and offering exquisite antique gold jewelry that transcends time, bringing the charm of historical artistry into the modern era. It intends to expand the antique gold jewellery segment by targeting new retail showrooms and wholesalers. This would help it in expanding its customer base thus leading to higher revenues and better margins.
