Thangamayil RI review - (May apply)

•    The company is engaged in the business of manufacturing and selling gold and diamond jewellery.
•    It also sells jewellery made from silver, precious and semi-precious metals and stones.
•    The company marked growth in its top and bottom lines for FY23 and FY24.
•    Based on its financial performance, the issue appears fully priced.
•    Investors may park funds for medium to long term considering a discount of around 17.7% based on its last traded price. 

ABOUT COMPANY:
Thangamayil Jewellery Ltd. (TJL) is primarily into the business of selling gold and diamond jewellery. It also sells jewellery made of silver, platinum and precious and semi-precious stones and other metals. TIL’s other offerings also include customized jewellery, gold and silver coins and utensils made of silver. Its product profile includes traditional, contemporary and combination designs across jewellery lines, usages and price points. Its gold, diamond and other jewellery inventory in each showroom reflects regional customer preferences and designs. Its focus on design and innovation, ability to recognize consumer preferences and market trends, the intricacy of designs and the quality of products are key strengths. Under its brand “Thangamayil”, it has created various other Registered Designs & Collections of jewellery brands such as Subiksham, Minimini Diamonds (Thangamayil Diamonds for everyone), Sayonee, Omana, Punnagai, BeU, Thanga Mangalyam, Sil-Wear Smile, Kutty smile and Lakshanam to cater to the varied needs of customers.

TIL also has several saving schemes for customers such as SUPER GOLD, FUTURE PLUS FLEXI, SMART GOLD PLAN AND DIGI GOLD to facilitate customers to save and invest in form of gold. Additionally, it has one jewellery manufacturing facilities in Madurai, that cater to its sales.

The company manufactures as well as sources jewellery from various dealers in PAN India level, mainly from Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Mumbai, Gujarat and West Bengal. It manufactures gold and Silver jewellery for sale in showrooms at manufacturing facilities in Madurai. In addition, it has access to a range of contract manufacturers that are generally smaller, localized jewellery manufacturers from various parts of India allows it to offer a diverse product range. TIL stringently follows the hallmarking process for all jewellery. Its marketing campaigns are tailored to enhance brand recall and generate increased footfalls in Showrooms throughout the year and to highlight the variety of collection and designs, especially light weight gold jewellery. Its marketing schemes vary as per occasion, season and the needs of customers and are tailored to befit occasions such as weddings, anniversaries, birthdays and festivities, when people customarily buy jewellery. Its total showroom count has grown from 57 showrooms across Tamil Nadu cities, as of March 31, 2024 to 59 showrooms across Tamil Nadu cities, as of September 30, 2024. As of January 31, 2025, it had 2815 employees on its payroll. (There is a mismatch on its employees’ count on page no. 71 of the offer document).

ISSUE DETAILS:
The company is coming out with Rights Issue (RI) of 3642857 equity shares of Rs. 10 each at a fixed price of Rs. 1400 per shares to mobilize Rs. 510.00 cr. The RI is opening for subscription on February 21, 2025, and will close on March 04, 2025. The company is offering RI in the ratio of 2 for 15 to its eligible stakeholders as of the record date of February 11, 2025. The company is asking for full money on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 2.59 cr. for this RI process, and from the net proceeds, it will utilize Rs. 8.71 cr. for capex on new stores, Rs. 401.03 cr. for inventory of new stores, and Rs. 97.67 cr. for general corporate purposes. (There is a mismatch of utilization of RI funds on page no. 55 of the offer document).

The RI is solely lead managed by Sundae Capital Advisors Pvt. Ltd., and MUFG Intime India Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up equity capital of Rs. 27.44 cr. will stand enhanced to Rs. 31.08 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 4351.48 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted total revenue/net profit of Rs. 3155.90 cr. / Rs. 79.74 cr. (FY23), Rs. 3832.18 cr. / Rs. 123.24 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it posted a profit of Rs. 87.31 cr. on a total revenue of Rs. 3535.57 cr. The 9M of fY25 indicates pressure on margins compared to 9M of FY24.

DIVIDEND POLICY:
The company has declared a dividend of 60% for FY24 and 100% for FY24. It will adopt a prudent dividend policy based on its financial performance and future prospects. However, the offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 533158 (FV Rs. 10)
The scrip last closed on cum-right basis at Rs. 1903.75 on February 10, 2025, and opened on an ex-right basis at Rs. 1831.00 on February 11, 2025. Since then, it has marked a high/low of Rs. 1854.95 / Rs. 1709.85. The scrip last closed at Rs. 1701.85 as of February 20 2025. For the last 52 weeks’ it has posted a high/low of Rs. 2558.06 / Rs. 1107.62. The counter is currently under ESM: Stage 1.

The promoters’ holding has been declined to 61.27 at for the last two quarters ended with December 31, 2024 from 67.32% for the quarter ended June 30, 2024. The counter is well maintained above the RI price to tempt investors.