Motisons lists at 98% premium; freezes in 5% lower circuit on profit taking

The stock listed at Rs 109, up 98 per cent over its issue price of Rs 55 per share on the National Stock Exchange (NSE)

Jewellery retailer Motisons Jewellers made a bumper market debut on Tuesday, Dec 26 with its shares listing at Rs 109, doubling investors' money. This was a 98 per cent premium to the issue price of Rs 55 on the National Stock Exchange (NSE). 

On the BSE, the stock got listed at Rs 103.90, up 89 per cent against its issue price. Post listing, it saw sharp swings between losses and gains. It hit the 5 per cent upper circuit at Rs 109.09 and then fell over 4 per cent to Rs 99 on the BSE.

At the time of writing this report, the stock was locked in the 5 per cent lower circuit on NSE at Rs 103.55 on profit booking. 

Around 8.21 million shares changed hands and there were pending sell orders for 1.71 million shares on the NSE, the exchange data showed. 

The company’s jewellery business includes the sale of jewellery made of gold, diamond, kundan and sale of other jewellery products that include pearl, silver, platinum, precious, semi-precious stones and other metals.

Additionally, company also sells gold and silver coins, utensils and other artifacts.

Motisons Jewellers offers 300,000 designs in gold, diamond and other jewellery across different price points. The growth in Indian jewellery has is being driven by rising middle class population and sharp increase in disposable income amongst youth.

Motison's commitment to retail network expansion and technology integration further strengthens its growth prospects. However, the highly competitive landscape and dependence on third-party suppliers present key challenges.

Additionally, the company is susceptible to negative publicity and seasonal demand fluctuations.

Despite these considerations, the IPO's attractive valuation of 16x P/E offers a degree of risk mitigation. Considering Motisons' strong brand, proven track record, and growth plans, alongside the current market sentiment, analysts at Swastika Investmart had recommended applying for this IPO with 'cautious optimism'.

Motisons has grown its revenue/Ebitda/pat at a CAGR of 31 per cent/26 per cent/51 per cent respectively over FY21-23. The company has a healthy operating margin versus peers albeit is weak in parameters like Inventory days, WC days and leverage ratios, said those at Indsec Securities. 

Motisons underperformances the industry average. Additionally, partial repayment of debt is a key positive for the company, they said in a pre-IPO note.