Shanti Gold: Crafting Excellence in the World of Gold Jewellery

A jeweler of 22 carat CZ casting gold is Shanti Gold International. It creates and produces a broad range of gold jewelry for both special events and everyday wear, such as bangles, rings, necklaces, and whole sets. Every month, it releases over 400 new designs and has about 80 designers working on it. It has a 2700 kg yearly capacity integrated production plant in Andheri.

The company’s goal in undertaking an IPO is to fund capital expenditures and enhance its balance sheet. The majority of the INR 3,600 million revenues from the IPO would be used to meet working capital needs.

Offer Specifics for the IPO

Up to 18,096,000 equity shares with a face value of INR 10.00 each are being issued in a new offering as part of the IPO, totaling up to INR 3600 million. This IPO does not include an OFS.

Price range for each equity share: INR 189 to INR 199

BRLMs:

· Private Limited Choice Capital Advisors

Founders and Promoters Selling Shares:

Shashank, Manojkumar N. Jain, and Pankajkumar H. Jagawat are the company’s promoters. They are all keeping their investment.

The IPO’s goals are:

The balance sheet will be strengthened and its capital expenditure needs will be satisfied with the IPO’s revenues. In particular, the business will use the net proceeds to further the following objectives:

Capital Outlays: For the construction of the proposed Jaipur facility: 462.97 million Indian rupees
Debt Repayment/Deleveraging: For the redemption or early repayment of certain INR 170.00 million loans
Working Capital: To fulfill the INR 2000 million working capital need

An Overview of the Indian Gem & Jewellery Industry

A significant portion of India’s overall goods exports come from the gem and jewelry industry, which is a significant sector in the country. It accounts for 15% of India’s merchandise exports and 7% of the country’s GDP. Additionally, the industry is deeply ingrained in the nation’s customs and culture. Jewelry made of gold and diamonds is popular for festivals, weddings, and other festive occasions. The sector provides a wide range of products, including gold, diamond, and studded jewelry, as well as other stones and metals, and caters to clients from a variety of socioeconomic backgrounds, including price-conscious consumers and wealthy luxury shoppers.

India is one of the biggest buyers of gold and diamond jewelry worldwide, and domestic consumption is the industry’s main driver. Because India is the center for diamond cutting and polishing, the sector also employs a large number of people. India produces about 90% of the polished diamonds used worldwide. There are both organized and unorganized companies in the business, with the former controlling the majority of the market.

Important Sections

The following major categories may be used to roughly divide the Indian gem and jewelry market:

Gold Jewelry

Approximately 80% of the market share is held by the main section of the business, gold jewelry. Given that gold is seen as a sign of riches and success, gold jewelry is a historic and cultural mainstay in Indian society. Products in this category range widely, from classic gold ornaments to more recent and sophisticated styles.

Diamond Jewelry

Another important market niche in the sector is diamond jewelry, which holds around 10% of the market. With an increasing desire for gold jewelry adorned with diamonds, diamond jewelry is becoming more and more popular in India, especially among the younger population.

Additional Precious Metals and Stones

Other valuable metals and stones, such silver, platinum, and colored gemstones, are included in this section. Although this market is less than that of gold and diamond jewelry, it is expanding in popularity, especially among younger people who have a greater desire for modern and fashionable jewelry.

Industry Size and Development Patterns

Due to an increase in both local and foreign demand, the Indian gem and jewelry business has experienced significant growth over the years. With a compound annual growth rate (CAGR) of 28.7% from CY20 to CY23, the industry’s market size was Rs. 6,482 billion in CY23. Since gold jewelry makes up 80% of the market, it dominates the sector.

A number of factors contributed to the industry’s growth:

Growing Demand for Branded Jewellery: As consumers’ awareness of quality and certification has increased, so too has the demand for branded jewellery. This is probably going to help the organized section expand even more.
Rules and Policies of the Government: Good government initiatives, such as the Goods and Services Tax (GST) and the requirement that gold jewelry be hallmarked, have promoted quality, uniformity in pricing, and transparency, helping customers move from unorganized neighborhood stores to certified, organized businesses.

Digital Transformation: Omnichannel retailing strategies, digital brand presence, and customized consumer experiences are increasing the appeal and, eventually, competitiveness of organized companies in the market.

Digital Transformation: Omnichannel retailing strategies, digital brand presence, and customized consumer experiences are increasing the appeal and, eventually, competitiveness of organized companies in the market.
Growing Disposable Incomes: Rising disposable incomes are driving increasing demand for luxury and semi-luxury products like jewelry, particularly in tier-II and tier-III markets.

All things considered, it is anticipated that the Indian gem and jewelry market would continue to rise rapidly in the foreseeable future.

Background of the Company: Shanti Gold International
One of the leading manufacturers of fine 22kt (cubic zirconia) CZ casting gold jewelry is Shanti Gold International Limited. It is skilled in both designing and producing jewelry. The firm was founded by Manojkumar N. Jain and Pankajkumar H. Jagawat. Together, they have more than 20 years of industry experience.

The company was first founded as a partnership in 2003. In 2013, the partnership firm changed its name to Shanti Gold International Limited and was reorganized as an LLC.

Manojkumar N. Jain and Pankajkumar H. Jagawat, its directors, have affiliations with Utssav CZ Gold Jewels Limited and Uzuri Jewels Private Limited. Despite having non-compete agreements in place, these companies operate in industries that are comparable to those of Shanti Gold International Limited.

Important sections:

Gold jewelry: Shanti Gold creates and produces 22kt gold jewelry, including necklaces, rings, bangles, and whole sets.

Services

Among the services the business provides are:

Personalization: With the company’s assistance, clients may create their own jewelry pieces and customize the products.
Quality Control: The design and quality of the jewelry produced by Shanti Gold International Limited have been praised.

Important Features

Wide Range of Products: The business offers a wide range of gold jewelry items, including chains, rings, bracelets, and even whole jewelry sets.

Personalization: The business offers its customers the ability to customize their jewelry items.

The Competitive Environment

The business competes fiercely with a number of well-established firms in its field. Among the key rivals are:

• Tanishq is a reputable jewelry brand in India that is well-known for its robust distribution system and premium goods.
• One of India’s top jewelry retailers, Kalyan Jewellers is well-known throughout the southern part of the country.
• One of India’s leading jewelry retailers, Malabar Gold & Diamonds is well-known throughout the southern part of the country.
• One of India’s top jewelry retailers, Joyalukkas India Limited is well-known in the southern part of the country.

Strengths

• Customer-centric designs: The company’s focus on high-quality products, innovative designs, and excellent customer service has helped it to differentiate itself from its competitors.
• Strong Distribution Network: The company has a strong distribution network, with a presence in several states across India.
• Experienced Promoters: The promoters of the company have rich experience of over 20 years in the Jewellery industry
• In-House Manufacturing: The company has a complete integrated in-house manufacturing facility that focuses on better control of the quality of the products to achieve the desired quality of products to meet the requirements of customers.
• Focus On Efficiency: There is a high degree of automation in production and processing processes using machines like casting machines, steamers, induction melter, air compressors, etc.

Weaknesses

Volatility in raw material costs: The business produces jewellery based on gold, precious metals and stones. The prices vary significantly and would negatively impact the company’s profitability if the inventory is not managed properly.

Limited Geographical Presence: The company has a strong base in South India, with a weak presence in other regions.

High Working Capital Requirements: The company needs significant working capital due to the high cost of its inventory. Cash flow was also negative over the past 2 years. Efficient working capital management is critical for the company’s overall financial health and for the company to keep scaling its operations.

Single product line: Dependence on 22ct CZ casting gold jewellery exposes the company to risks of changing consumer preferences.

Financial Profile

Strong FY25 Revenue Growth: Shanti Gold International witnessed a robust revenue growth over the past two years. Revenue growth in FY25 was especially strong at 55.5%. To a large extent, the revenue growth was driven by the higher price of gold jewellery. The ASP of studded gold jewellery increased from INR 5772 in FY24 to INR 7277 in FY25. In addition to higher ASP, core demand for the company’s products was also higher, as evidenced by higher utilisation of its Andheri manufacturing facility and a 16-17% higher production volume in FY25 (vs FY24).

Several key factors have contributed to the company’s higher sales volume. These include:

• Increased demand for core products: The company’s core products have seen an increase in demand, driven by growing customer needs and preferences.
• Successful expansion into new markets: The company’s strategic expansion into new markets has opened up new revenue streams and provided access to a larger customer base.
• Innovative product offerings: The company’s focus on innovation has led to the development of new products and services that have resonated with customers and driven revenue growth.

Profitability on the Rise: EBITDA margins have increased for the past two years. From 6.71% EBITDA margins in CY23, they have improved to 8.8% in CY25. Higher utilisation and lower cost inventory (due to an increase in gold prices) were among the key reasons for the increased profitability over the past two years.

Table 1: Peer Comparison – Valuation

Source: RHP; * – Upper end of price band

Table 2: Peer Comparison – Financials

Source: RHP

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