Divine Hira Jewellers Ltd. (DHJL), a gold jewellery marketing company, is set to debut on the NSE SME Emerge platform with its maiden IPO, opened for subscription on March 17, 2025, and closing on March 19, 2025. The company is offering 3,537,600 equity shares at a fixed price of INR 90 per share, aiming to raise INR 31.84 crore. However, concerns over its valuation and financial sustainability have raised investor caution.
DHJL specializes in the design and marketing of 22 Karat gold jewellery, catering to wholesalers, showrooms, and retailers across India. The company does not have an in-house manufacturing unit but outsources jewellery production to skilled artisans. Recently, it has expanded its portfolio by curating antique gold jewellery and is in the process of directly importing gold to optimize costs. DHJL’s product range includes handcrafted and machine-made gold jewellery for daily wear, weddings, and festivals, covering mid-market and value segments.
The IPO will see DHJL offloading 27.11% of its post-issue paid-up capital. Of the INR 31.84 crore proceeds, INR 19 crore will be allocated for working capital, INR 3 crore for loan repayment, and INR 6.19 crore for general corporate purposes. The issue is solely lead-managed by Horizon Management Pvt. Ltd., with Giriraj Stock Broking Pvt. Ltd. as the market maker.
Having issued shares at INR 40 in late 2022 and early 2023, the company also declared bonus issues at 14:5 in January 2023 and 3:10 in June 2024. Post-IPO, DHJL’s equity capital will rise to INR 13.05 crore, leading to a projected market capitalization of INR 117.42 crore.
DHJL’s financials reveal a fluctuating top line but a significant jump in net profit from FY24 onwards. The company reported revenue of INR 142.4 crore and a net profit of INR 0.28 crore in FY22, followed by INR 246.45 crore revenue and INR 0.91 crore net profit in FY23. In FY24, the net profit surged to INR 1.48 crore on revenue of INR 183.41 crore. For H1 FY25, net profit rose further to INR 2.50 crore on INR 136.03 crore revenue. While this sudden profit surge may attract investors, its sustainability remains questionable.
The IPO is priced at a P/E ratio of 23.50 (annualized FY25 earnings) and a steep 78.95 based on FY24 earnings. Additionally, its P/BV stands at 6.96 pre-IPO and 2.66 post-IPO, indicating aggressive pricing. The company’s listed peer, Sky Gold, trades at a P/E of 47.4, but the comparison lacks direct equivalence.
Despite its recent profitability, DHJL operates in a highly competitive and fragmented market. The company’s low profit margins (ranging from 0.20% in FY22 to 1.84% in H1 FY25) and high P/E ratio make the IPO a risky bet. Given the pricing concerns and the uncertainty surrounding profit sustainability, cautious investors may prefer to skip this high-risk, low-return offering.
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