Can Lalithaa Jewellery Mart IPO deliver long-term growth for high-risk investors?

ET Intelligence Group: Lalithaa Jewellery Mart, a jewellery retailer, plans to raise ₹1,200 crore through a fresh issue to fund capital expenditure. It will also raise ₹500 crore through an offer for sale. The promoter group's stake will fall to 82.9% after the IPO from 97.7%. The company offers gold, silver and diamond jewellery.

The company's entire revenue comes from the southern parts of India, signalling geographical concentration. Its revenue per store exceeds that of peers, while revenue per square feet (sq ft) is at the higher end of the peer range. The valuation is at the lower end compared with peers. Given these factors, investors with high-risk appetite may consider the IPO.

Business

Incorporated in 1985, Lalithaa Jewellery Mart is a jewellery retailer operating under the brand name 'Lalithaa'. It has 61 stores in 51 cities in Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and the Union Territory of Puducherry. It operates two manufacturing facilities in Tamil Nadu. The Thirumudivakkam plant in Chennai is operated by the company and Maraimalai plant in Kanchipuram is operated through a wholly owned subsidiary, Asita Jewellery Manufacturing. In FY26, 45 out of 61 stores were in Tier II and Tier III cities, contributing 60.3% to total revenue. About 92% of its revenue comes from gold jewellery.

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Financials

Revenue from operations jumped 22.1% annually to ₹25,023.9 crore and net profit surged 67.5% annually to ₹1,009.8 crore between FY24 and FY26. Operating margin before depreciation and amortization (EBITDA margin) increased to 6.7% in FY26 from 4.1% in FY24 compared with 5.7-20% for its peer group. Revenue per store grew to ₹410.2 crore from ₹316.8 crore over FY24-26, well above the peer range of ₹42-138 crore. Revenue per sq ft increased to ₹3.8 lakh in FY26 from ₹2.9 lakh in FY24, placing it near the upper end of the peer range of ₹1.4-4.5 lakh.

Valuation

Based on the post-IPO equity and net profit for FY26, the company is valued at a price-earnings (P/E) multiple of upto 11, which is at the lower end of the P/E range of 9-46 for peers including Tribhovandas Bhimji Zaveri, Senco Gold, PC Jeweller, P N Gadgil Jewellers, Kalyan Jewellers India and Thangamayil Jewellery.