Motisons Jewellers Makes Stellar Debut On Dalal Street, Lists At 98% Premium Debut

Jaipur-based Motisons Jewellers witnessed a stellar debut on December 26, skyrocketing to a 98% premium over the issue price. The stock, listed at Rs 109 per share, marked a significant leap from the IPO price of Rs 55 per share.

The Rs 151 crore public issue, held from December 18-20, proved to be a resounding success, garnering a staggering 159.61 times oversubscription across all investor categories. High net-worth individuals showed exceptional interest by oversubscribing 233.91 times, qualified institutional buyers at 157.40 times, and retail investors at 122.28 times.

Motisons Jewellers, a family-owned business by the Chhabra family, plans to utilize the net fresh issue proceeds strategically. The primary allocation includes debt repayment of Rs 58 crore and addressing working capital requirements amounting to Rs 71 crore. Additionally, funds will be allocated for general corporate purposes. As of June FY24, the company's total borrowings stood at Rs 166 crore.

The financial performance of Motisons Jewellers over the past three years has been robust, with net profit doubling in the last two years. The year ending March FY23 witnessed a significant jump of 50.5% in net profit, reaching Rs 22.2 crore, while revenue surged by 16.5% to Rs 366.2 crore compared to the previous year. EBITDA also showed a healthy increase of 26.9% YoY, reaching Rs 49 crore, with a margin expansion of 109 basis points at 13.37%.

All four of Motisons Jewellers' showrooms are concentrated in Jaipur, making the company susceptible to any adverse developments in the region. Any negative impact on the area could potentially harm Motisons' business, prospects, financial condition, and overall results of operations.

Furthermore, the company's promoters, Sanjay Chhabra and Sandeep Chhabra, have faced scrutiny in the past. The duo has been under investigation for alleged betting in IPL cricket matches and has also been part of investigations by the Securities and Exchange Board of India (SEBI). An inquiry was initiated against a promoter group company for allegedly engaging in non-genuine trades, according to the Red Herring Prospectus (RHP).

Investors are advised to tread cautiously, considering both the success of Motisons Jewellers' IPO and the potential risks associated with the company's concentrated operations and the history of investigations involving its promoters.