Indian jeweller Kalyan plans IPO as it looks to ride on long-term appeal of gold

The company, which is backed by Warburg Pincus, is planning to raise about 17.5 billion Indian rupees from the sale

Kalyan has 107 stores in India and 30 showrooms in the Middle East. Pawan Singh / The National

Kalyan Jewellers plans to raise as much as $235 million (Dh863.14m), through a stock market flotation, making it the largest initial share sale among Indian jewellers, as it pins its hope on gold’s long-term allure overriding a coronavirus-induced dip in India.

The South Asian country is the world’s second-biggest consumer market for the precious metal.

The Warburg Pincus-backed company plans to raise about 17.5 billion Indian rupees (Dh867m), of which 10bn rupees will be through a fresh issue of shares and 7.5bn rupees from the sale of equity by existing investors, it said in a draft prospectus to exchanges.

While expenditure on gold will be subdued this year because of the pandemic, its long-term appeal remains intact as cultural norms dictate the metal’s widespread use during Indian weddings and as an investment option, Kalyan said.

About 10 million weddings take place in India every year, creating demand for as much as 400 tonnes of gold and the young age profile of the country will sustain growth, it said.

Started in 1993 by TS Kalyanaraman in Kerala, the jeweller had an income of 102bn rupees in the financial year ended March 31, it said. Kalyan has 107 stores in India and 30 showrooms in the Middle East.

Organised jewellers have a 32 per cent share of India’s $64bn jewellery retail sector, while standalone, smaller stores make for the rest, it said citing Technopak Advisers.

“On the demand side, consumers’ desire for a safer shopping experience with more space, well-trained store personnel”, will benefit jewellers like Kalyan, it said.