Home / Business and Economy / Jewelry Giant Plans Rs 1000 Cr IPO Amidst Financial Headwinds
Jewelry Giant Plans Rs 1000 Cr IPO Amidst Financial Headwinds
30 Sep
Summary
- Royal Chain files Rs 1,000 crore IPO, including Rs 850 crore fresh issue.
- Proceeds to repay debt, fund general corporate needs.
- Company faces risks from gold price volatility and negative cash flow.
Royal Chain Limited has submitted its Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI), aiming to raise up to Rs 1,000 crore via an Initial Public Offering (IPO). This fundraising effort comprises a fresh issuance of shares worth Rs 850 crore and an offer for sale (OFS) component valued at Rs 150 crore. JM Financial and 360 ONE WAM are managing the book running, with MUFG Intime India as the registrar.
The company plans to allocate Rs 650 crore from the fresh issue towards repaying outstanding loan facilities and accrued interest, with the remainder designated for general corporate purposes. Royal Chain operates as a vertically integrated, technology-driven original design manufacturer (ODM) specializing in gold chains and jewelry, serving organized retailers across India.
Despite reporting increased profits and revenue in FY26 compared to FY25, Royal Chain has experienced declining capacity utilization from 64.15% in FY24 to 33.37% in FY26. The company has also reported negative cash flows from operating and investing activities for FY26, FY25, and FY24.
Key risks highlighted include significant gold price volatility, as gold constitutes over 81% of expenses. Additionally, the company faces substantial working capital requirements, with loans making up over 72% of total borrowings. Dependence on a single manufacturing facility and concentration risks from key suppliers and customers, without long-term formal agreements, are also noted concerns.
