Flat listing for Vaibhav Jewellers. Should you hold or sell?
Vaibhav Jewellers, even though in line with expectations, disappointed investors.
The stock debuted at Rs 213.5 per share, compared with its IPO price of Rs 215.
Analysts were mixed on the post listing strategy for investors. While some recommended investors to exit their positions, others advised to hold the stock for the long term.
“The muted listing could be due to a number of factors, including the high IPO price, the company's relatively small size, and the competitive jewelry market," said Shivani Nyati, Head of Wealth, Swastika Investmart, while recommending an exit position.
The IPO of Vaibhav Jewellers barely scraped through on the last day of the bidding process.
The overall subscription stood at 2.25 times at close.
Net proceeds from the issue will be used to fund capex costs for the proposed 8 new showrooms, inventory cost of new showrooms and other general corporate purposes.
«Vaibhav Jewellers boasts of a 23% return on its equity in FY23, which is attractive compared to its listed peers. The company plans to open eight new stores to target more Tier 2 and Tier 3 markets, which augur well as rural markets contributed 50-52% of the total jewellery market in FY23,» said Dhruv Mudaraddi, Research Analyst, StoxBox.
«Based on the prospects of the sector, the company’s product catalogue, its stronghold in the southern markets, and a good track record, we remain positive on the company and recommend investors who have received allotment to hold the stock from a medium to long term perspective,» Mudaraddi added.
The company is one of the earlier entrants in the organised jewellery retail market of Andhra Pradesh and continues to focus on regional expansion into the high-growth untapped regions within the
