Koura Fine Diamond Jewelry Limited

Koura Fine Diamond Jewelry Limitedy is engaged into the wholesale business of gold and diamonds jewelleries. The Promoter has a history spanning over two decades in the Indian Jewellery Industry. The business model is B2B. They deal in two types of jewellery; one is in 22 Karat Gold jewellery and another one is in 18 Karat Diamond jewellery. They offer a diverse range of jewellery products and is dedicated to designing, manufacturing, and selling high-quality jewellery that includes necklaces, chains, rings and earrings. They source finished jewellery from third-party artisans located across India. Additionally, they also supply raw material i.e. gold bullion / bars to artisans for making of the jewellery on a job-work basis in Ahmedabad, Mumbai, Rajkot, and Surat. The constant endeavour is to maintain the highest standard and quality of the gold, diamonds used in the jewel pieces. As per financial performance, Koura Fine Diamond Jewelry Limited has posted total income / net profits of Rs 7.92 Cr / Rs 0.10 Cr (FY21), Rs 5.56 Cr / Rs 0.31 Cr (FY22), Rs 4.99 Cr / Rs 0.18 Cr (upto 13.03.2023 FY23) and Rs 6.02 Cr / Rs 0.17 Cr (upto Q2 FY24). So as per previous financials data, company has shown zig-zag results, but sudden increase in net profit, just before IPO generates doubts. Issue is priced at a P/BV of 5.00 as per NAV of 10.99 as on post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 64.10, 108.24 and 58.26 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, GYR Capital Advisors Private Limited is associated with this SME IPO and handled 20 SME IPOs in last 3 year. From last 20 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 20 SME IPOs, four are trading below issue price and remaining opened above or at par issue price. ( As on 02.03.24 ) As per financials, Koura Fine Diamond Jewelry Limited has shown zig-zag results, RoNW is 6.74% and P/E is respectively 64.10, 108.24 and 58.26 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and sudden rise in net-profit is very surprising. Company is in business of gold and diamonds jewelleries, which is highly competitive and fragmented segment. Here, we may find better options in listed space with cheaper valuations. Performance of BRLM is good. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Kamlesh Keshavlal Lodhiya