Company Overview
Having a history of more than 15 years in the jewellery industry, RBZ Jewellers Ltd. (RBZ) is one of the leading organized manufacturers of gold jewellery in India, specializing in Antique Bridal Gold Jewellery and distribution to reputable nation-wide retailers and significant regional players in India. RBZ holds approximately 1% of the total organized wholesale gold jewellery market in India. The company designs and manufactures a wide range of Antique Bridal Gold Jewellery which consists of Jadau, Meena and Kundan work and sell it on a wholesale and retail basis. They also process and supply Antique Bridal Gold Jewellery on job work basis to national retailers. Their customer base in wholesale business includes reputed national, regional and local family jewellers spread across 20 states and 72 cities within India. RBZ also operates its retail showroom under the brand name “Harit Zaveri” and is an established player in Ahmedabad. RBZ offers jewellery for bridal, occasional and daily wear at various price range in their retail showroom along with exports to the Middle East region. They carry out their manufacturing operations from a well-equipped and modern facility situated at Ahmedabad, Gujarat having advanced technologies in casting, laser and 3-D printing. The manufacturing facility has an area admeasuring 23,966 sq. ft and is owned by them. Their retail showroom is spread over 11,667 sq. ft. and is situated in Satellite area, Ahmedabad, Gujarat in the vicinity where other large retailers have their presence. RBZ owns an area admeasuring 10,417 sq. ft. of their showroom space and area admeasuring 1,250 sq. ft. is occupied on lease basis.
Objects of the issue:
The net proceeds from the fresh issue will be used towards the following purposes:
- Funding the working capital requirements of the company ;
- General corporate purposes.
Investment Rationale:
Organized manufacturing arrangement under one roof enables strong financial performance
RBZ has a manufacturing setup consisting of bench-working artisans, technology for laser cutting, laser engraving and state-of-the-art casting units. The company has progressive dyes, hydraulic press dyes, and an in-house 3D printing machine to convert CAD images into CAM. The RBZ manufacturing facility can process and manufacture everything from nuggets to necklaces, specifically for gold bridal jewellery, which is done under one roof using a mix of the latest machines and human skills, comprising jewellery designers and well-trained and skilled artisans. They own the premises at which the manufacturing facility is situated. The facility under one roof brings efficiency, control, supply assurance, and large-scale supplies crucial to meeting customers’ demands. It also helps command better management oversight, secure precious metals due to reduced movement, and, most importantly, control manufacturing process loss. This enables the company to control costs, increase profit margins, and provide them a competitive advantage. The company’s large skilled workforce with knowledge and expertise in jewellery making is a key competitive strength that has enabled it to establish and maintain reputation and brand. This organized setup is found favourable by large retailers who deliver quality products to their customers as the dependability on products and predictability of supply is easier for them. In the six months ended September 30, 2023, the manufacturing capability of processing gold jewellery stood at 2,040 kgs.
Access to diversified sources of capital and effective cost of funds
One of the company’s key strengths in jewellery is its broad reach and presence across India. With a customer base in 20 states and 72 cities, they have established a strong foothold in the market and deeply understand local customer preferences and trends. The company has relationship with national retailers like Titan Company, Malabar Gold, Joyalukkas India, Senco Gold and other prominent retailers such as Kalamandir Jewellers, PN Gadgil Jewellers, and prestigious family retailers such as Hazoorilal Jewellers, Om Jewellers, C. Krishniah Chetty Jewellers, Vummidi Bangaru Jewellers and CH Jewellers. These key ten customers contributed 18.6% of the total revenue of the company for FY23. They also export to the Middle East region. The client mix and geographical spread helps them to understand customer preferences across regions, cultures, and socioeconomic strata, one of their key strengths in rolling out designs as per emerging trends.
Valuation and Outlook:
The company has more than 15 years of experience in the jewellery industry. They design and manufacture a wide range of antique bridal gold jewellery, consisting of Jadau, Meena, and Kundan, and sell them in wholesale and retail markets. They also process and supply Antique Bridal Gold Jewellery on a work basis to national retailers. Their wholesale customer base includes reputed national, regional, and local family jewellers spread across 20 states and 72 cities within India. RBZ also operates its retail showroom under the “Harit Zaveri” brand and is an established player in Ahmedabad. They also export their jewellery to the Middle East region. They manufacture operations from a well-equipped, modern facility in Ahmedabad, Gujarat, with advanced casting, laser, and 3-D printing technologies. The company also has a track record of sustained consolidated revenue from operations, growing at a CAGR of 64.0% during FY21-23 period. Overall, the company’s diverse jewellery collections comprising different manufacturing techniques and varieties, a strong brand presence in the Indian jewellery industry, and a wide reach and presence across India have helped it to grow its business successfully. The issue is valued at a P/E of 13.4x on the upper price band based on FY23 earnings, which is fairly valued. We, therefore, recommend an “SUBSCRIBE” rating for the issue.
