Shanti Gold International Ltd. (Neutral)

Highlights

Shanti Gold International Limited (SGIL) incorporated in 2003, is one of the leading manufacturers of high-quality 22kt CZ casting gold jewellery and specializing in the design and production of all types of gold jewellery.

Company offers a wide range of high-quality, intricately designed pieces, including bangles, rings, necklaces, and complete jewellery sets across various price points ranging from jewellery for special occasions, such as weddings to festive and daily-wear jewellery.

They have a fully integrated in-house manufacturing setup, which enables them to exercise control over the quality of products and meet the standards expected by customers. All aspects of design, manufacturing, and packaging have been carried out in-house, enabling them to create jewellery tailored to clients’ preferences.

SGIL fostered long standing relationships with several jewellery businesses, including corporate jewellery brands (Corporate Clients), such as Joyalukkas India Limited, Lalithaa Jewellery Mart Limited, Alukkas Enterprises Private Limited, Vysyaraju Jewellers Private Limited and Shree Kalptaru Jeweller Private Limited.

Out of the total proceeds of Rs. 3,601 mn, ~Rs. 463 mn would be utilized for CAPEX of new facility. Rs. 2,000 mn would go towards funding working capital requirement. Rs. 170 mn would be utilized for repayment of certain borrowing availed by the company and ~Rs. 968 mn would be utilized for general corporate purposes.

Key Highlights

• In CY24 the Indian jewellery market is expected to grow by 13.1 pct YoY to Rs. 4,653 bn. Furthermore, the market is expected to grow at a CAGR of 9.7 pct between CY23 and CY29 to Rs 7,162 billion led by growing middle-class population and their increasing disposable income levels.
• Their Andheri Manufacturing Facility spans over 13,448.86 square feet area, equipped to produce variety of jewellery with precision and efficiency and they have an installed manufacturing capacity of 2,700 kg per annum. Their manufacturing and processing operations are carried out using machines such as casting machines, steamers, induction melter, air compressors, etc.
• SGIL are also planning to introduce a new line of machine-made plain gold jewellery. This new product line will cater to the demand for plain gold jewellery. The company has successfully secured three LOIs from prospective buyers in this new product category.
• As part of SGIL strategy for international growth, they intend to expand their presence in global markets, including, the USA and the UAE. By participating in trade exhibitions in the USA and the UAE, SGIL aim to increase brand visibility and recognition among international jewellery businesses, distributors, and consumers.
• SGIL’s key growth strategies includes (i) Capturing market opportunities in the growing jewellery industry (ii) Geographical expansion in North India (iii) Penetrate new clients within the existing export countries (iv) Augmenting working capital for scalable business operations.
• The sales/EBITDA/profit of the company has grown by 27.61 pct CAGR/46.37 pct CAGR/67.87 pct CAGR over FY23 – FY25. In FY25 the company reported sales of Rs. 11,064 mn, which grew 55.22 pct YoY while EBITDA of the company rose 82.62 pct YoY to Rs. 977 mn. In FY25 the company posted profit of Rs. 558 mn which jumped 107 pct YoY.

Key Risk

• The company might face city dependency risk, as more than 76 pct of their revenue comes from Southern India.
• SGIL business is concentrated on the sale of 22kt CZ jewellery which exposes them to risks that could impact sales, including fluctuations in the demand for 22kt CZ gold jewellery.
• The company might face supplier risk as 40 pct of Raw material comes from top 1 supplier.

Financial Performance

Peer Comparison Based on FY25 Financials

Valuation

Shanti Gold International Limited (SGIL) is engaged in the business of manufacturing gold jewellery. The company manufactures high-quality 22kt CZ casting gold jewellery, specialising in design and production. At the upper end of the price band of Rs. 199, the issue priced at PE of 25.7x of FY25 earnings post issue. The issue appears to be fully priced.

Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Advisor before making any investment using the app. Investing using the app is the sole decision of the investor and the company or any of its communication cannot be held responsible for it.