# **SHANKESH JEWELLERS LIMITED (SJL)** # **Comprehensive IPO Equity Research & Fundamental Analysis Report** **Listing Exchanges**: BSE & NSE (Mainboard) | **Date of Report**: August 18, 2026 | 1\. Executive Summary & Investment Thesis Company Overview Shankesh Jewellers Limited (SJL) is a Mumbai-based, specialized B2B manufacturer and distributor of hand-crafted gold jewellery, temple jewellery, antique jewellery, and customized bridal ornaments. Operating an asset-light manufacturing and outsourced artisan model, SJL functions as an integrated design-to-delivery supply chain partner to India's leading organized corporate jewellery retail chains. **Core Investment Thesis** 1. **Structural Beneficiary of Gold Industry Formalization**: Rapid shift from unorganized mom-and-pop stores toward organized corporate retail chains (e.g., Kalyan Jewellers, Joyalukkas, P.N. Gadgil, Aditya Birla Novel Jewels, Manoj Vaibhav Gems) creates strong secular demand for high-capacity, design-led B2B manufacturers. 2. **Explosive Operational Leverage & Margin Expansion**: Revenue expanded from ₹1,061.78 Cr in FY24 to ₹1,630.79 Cr in FY26 (+53.6% cumulative growth), while operating EBITDA surged from ₹28.60 Cr (2.69% margin) to ₹157.90 Cr (9.68% margin), and PAT expanded nearly nine-fold from ₹12.82 Cr to ₹106.68 Cr. 3. **Industry-Leading Capital Efficiency**: Commands an exceptional Return on Equity (ROE / RoNW) of **50.94%** and Return on Capital Employed (ROCE) of **41.57%** in FY26, substantially outpacing listed peers. 4. **Balance Sheet De-leveraging via IPO Proceeds**: Earmarking ₹158.00 Cr (57.6% of fresh proceeds) for debt retirement, reducing debt-to-equity from 0.80x to \<0.25x and unlocking significant interest cost savings. **Valuation & Outlook** Priced at **12.82x to 13.70x** post-issue FY26 P/E (Market Cap: \~₹1,367–₹1,460 Cr at ₹93/share) and post-repayment EV/EBITDA of \~8.66x, representing a steep discount to comparable B2B peer Sky Gold (\~34.9x P/E) and the broad industry average (22.5x P/E). Key Risks Client concentration (top clients contribute \~64% of revenues), gold price volatility, raw material procurement leasing terms, and working capital cycles. ## **2\. Issue Structure & Deal Parameters** | Parameter | Details / Metrics | | :---- | :---- | | **Issuer** | Shankesh Jewellers Limited (SJL) | | **Issue Structure** | Mainboard Book Built Issue (BSE & NSE) | | **Total Issue Size** | ₹367.18 Crore (3,94,81,720 Equity Shares at ₹93) | | **Fresh Issue** | ₹274.18 Crore (2,94,81,720 Equity Shares) | | **Offer for Sale (OFS)** | ₹93.00 Crore (1,00,000 Equity Shares) | | **Price Band** | ₹88.00 – ₹93.00 per equity share (Face Value: ₹5.00) | | **Lot Size** | 160 Equity Shares (Min Retail Application: ₹14,880) | | **Bidding Period** | August 18, 2026 – August 20, 2026 | | **Basis of Allotment** | August 21, 2026 | | **Tentative Listing Date** | August 25, 2026 | | **Post-Issue Market Cap** | ₹1,367.00 – ₹1,460.00 Crore (at upper price band) | | **Book Running Lead Manager** | Aryaman Financial Services Limited | | **Registrar** | KFin Technologies Limited | | **Issue Allocation** | QIB: 50% | **Objects of the Fresh Issue (Net Proceeds: ₹274.18 Cr)** 1. **Prepayment / Repayment of Borrowings**: ₹158.00 Crore to reduce outstanding debt, substantially lowering annual finance costs. 2. **Working Capital Requirements**: ₹80.00 Crore to support gold inventory replenishment and expanding order book volumes. 3. **General Corporate Purposes**: \~₹36.18 Crore. ## **3\. Business Architecture & Value Chain Positioning** **Operating Model** Shankesh Jewellers operates as a specialized B2B intermediary connecting bullion suppliers with institutional jewellery retailers. Rather than carrying heavy fixed manufacturing overheads, SJL utilizes a hybrid network of in-house design/quality control and contracted karigars (skilled artisans) across Maharashtra, Gujarat, West Bengal, and Tamil Nadu. **Client Relationships & Geographic Reach** * Caters to top organized retail chains including Joyalukkas, Kalyan Jewellers, P.N. Gadgil Jewellers, Novel Jewels (Aditya Birla Group), and Manoj Vaibhav Gems. * Active distribution presence across 21 states and 4 union territories in India. * Institutional client sales share increased from 55.08% in FY24 to 64.25% in FY26, highlighting deepened enterprise integration. **Product Specialization** * Handcrafted plain and studded gold jewellery (18k, 22k, 24k). * High-margin antique, temple, and Jadau heritage collections. * Lightweight and fusion jewellery engineered for modern urban demographics. ## **4\. Financial Statement Analysis (3-Year Restated Financials)** *Values in ₹ Crore unless otherwise stated* | Financial Metric | FY24 (Audited) | FY25 (Audited) | FY26 (Audited) | 3-Yr CAGR / Growth | | :---- | :---- | :---- | :---- | :---- | | **Revenue from Operations** | ₹1,061.78 | ₹1,403.83 | ₹1,630.79 | \+23.9% CAGR | | **Total Income** | ₹1,062.50 | ₹1,405.10 | ₹1,631.90 | \+23.9% CAGR | | **Cost of Materials Consumed** | ₹1,005.40 | ₹1,298.60 | ₹1,418.20 | \+18.8% CAGR | | **EBITDA** | ₹28.60 | ₹65.35 | ₹157.90 | \+135.0% CAGR | | **EBITDA Margin (%)** | 2.69% | 4.65% | 9.68% | \+699 bps expansion | | **Finance Costs** | ₹12.40 | ₹18.60 | ₹24.80 | High leverage in FY26 | | **Depreciation & Amortization** | ₹1.80 | ₹2.40 | ₹3.50 | \- | | **Profit Before Tax (PBT)** | ₹14.40 | ₹44.35 | ₹129.60 | \+200.0% CAGR | | **Profit After Tax (PAT)** | ₹12.82 | ₹40.18 | ₹106.68 | \+188.5% CAGR | | **PAT Margin (%)** | 1.21% | 2.86% | 6.54% | \+533 bps expansion | | **Net Worth / Equity** | ₹88.40 | ₹128.60 | ₹209.40 | \+53.9% CAGR | | **Total Borrowings** | ₹160.80 | ₹185.40 | ₹168.20 | Debt/Equity: 0.80x | | **Return on Net Worth (RoNW)** | 14.50% | 31.24% | 50.94% | \+3,644 bps expansion | | **ROCE** | 12.80% | 24.10% | 41.57% | \+2,877 bps expansion | | **Diluted EPS (₹)** | ₹0.98 | ₹3.08 | ₹8.18 | \+188.6% CAGR | ## **5\. Peer Benchmarking & Valuation Analysis** | Company Name | Market Cap (₹ Cr) | FY26 Revenue (₹ Cr) | EBITDA Margin (%) | Post-Issue P/E (x) | EV/EBITDA (x) | ROE (%) | ROCE (%) | | :---- | :---- | :---- | :---- | :---- | :---- | :---- | :---- | | **Shankesh Jewellers** | **1,367–1,460** | **1,630.79** | **9.68%** | **12.8x–13.7x** | **8.7x** | **50.94%** | **41.57%** | | Sky Gold & Diamonds | 4,200 | 1,745.00 | 6.90% | 34.86x | 21.5x | 23.37% | 20.60% | | Shanti Gold International | 850 | 1,120.00 | 9.86% | 10.04x | 7.8x | 23.42% | 24.04% | | Kalyan Jewellers India | 68,000 | 18,500.00 | 7.40% | 68.50x | 35.2x | 16.50% | 15.20% | | Titan Company Ltd | 4,48,000 | 48,200.00 | 10.80% | 75.20x | 48.0x | 31.40% | 36.80% | **Valuation Synthesis** * At the upper price band of ₹93, Shankesh is valued at **12.82x** on post-issue annualized FY26 EPS of \~₹7.25 and **9.72x** pre-debt EV/EBITDA. * Following the planned ₹158 Cr debt retirement, EV/EBITDA compresses to **\~8.66x**, delivering an estimated ₹18–20 Cr in annualized interest savings directly accretive to FY27 PAT. * Compared to primary B2B competitor Sky Gold (34.9x P/E, 6.9% EBITDA margin), Shankesh delivers superior profitability (+278 bps higher EBITDA margin) and higher return ratios (50.9% vs 23.4% ROE) at less than half the earnings multiple. ## **6\. Scenario Analysis & 12-Month Target Price Projections** **Bull Case (Target Price: ₹135 – ₹145 | \+45% to \+56%)** * Full benefit of ₹158 Cr debt reduction drops finance costs; PAT expands to ₹140+ Cr in FY27. * Retail network tie-ups expand with newly launched national chains (e.g. Aditya Birla Novel Jewels); EBITDA margins sustain at \~10%. * Market re-rates SJL toward 18–20x P/E. **Base Case (Target Price: ₹110 – ₹120 | \+18% to \+29%)** * Revenue grows at 15–18% CAGR; interest savings partially offset gold lease charges. * P/E multiple stabilizes at 14–16x on FY27 estimated EPS of ₹8.0–8.5. **Bear Case (Target Price: ₹75 – ₹82 | \-12% to \-19%)** * Sharp gold price volatility impacts hedging spread; inventory valuation loss occurs. * Major retail client cuts procurement allocation; margins compress to 5–6%. ## **7\. Key Investment Risks & Compliance Disclosures** 1. **Client Concentration**: Top institutional retail clients generate \~64.25% of total sales. The loss or reduction of orders from key accounts would materially impact volumes. 2. **Gold Price Fluctuations & Hedging Mechanisms**: Profitability is vulnerable to rapid swings in international gold prices, custom duties, and gold metal loan (GML) interest spreads. 3. **Working Capital Intensity**: Significant capital required for physical gold inventory maintenance and credit periods to retail chains. 4. **Outsourced Manufacturing Quality & Compliance**: Dependence on external artisans requires rigorous hallmarking and assaying supervision. **Disclosure** This report has been prepared for institutional and investment research following CFA Institute standards. Valuation projections and scenario targets represent probabilistic financial models based on RHP data and peer market multiples. Past financial performance does not guarantee future market returns.