Deepa Jewellers IPO (1 Sep - 3 Sep) Analysis

Mainboard IPO  |  BSE and NSE  |  Book Building  |  Hyderabad, Telangana

Deepa Jewellers Limited is an organised B2B designer, processor and supplier of hallmarked gold jewellery based in Hyderabad, Telangana. Incorporated in May 2016 and converted to a public limited company in September 2025, the company caters exclusively to jewellery retail chains and standalone stores across South India, and does not sell directly to end consumers.

The company designs its jewellery using an in house team of 15 designers who develop products tailored to customer requirements, prevailing market trends and regional preferences. Manufacturing is carried out through an outsourced model, wherein raw materials including gold, alloys and precious stones are supplied to a network of 41 third party karigars (artisans), who process and return finished ornaments ready for delivery.

This asset light approach provides operational flexibility without requiring significant capital investment in manufacturing infrastructure. All finished jewellery is hallmarked in compliance with Bureau of Indian Standards (BIS) norms.

The product portfolio spans 16 categories and 110 SKUs as of July 31, 2026. Key products include vaddanam (waist belt), CNC machine cut bangles, gents kada, vanky (armlet), dandpatti (bajuband), gundlamala haaram, kangan, earrings, maatil (ear chain), champasaralu (ear to hair chain), jada (braid ornament), mangtika (forehead pendant), bracelet and precious rings. The company also undertakes job work assignments and trades silver ornaments, 18 and 20 karat gold ornaments, precious stones and gold bullion.

As of July 31, 2026, the company serves 373 customers across 13 states and 1 union territory, comprising 47 jewellery retail chains and 326 standalone stores. Notable customers include Joyalukkas India Limited, Kalyan Jewellers India Limited, Lalithaa Jewellery Mart Limited, Chandana Brothers Textiles and Jewellers Private Limited, CMR Textiles and Jewellers Private Limited and Tribhovandas Bhimji Zaveri Limited. Revenue from South India accounted for 94.37% of total revenue in FY2026.

The company is setting up an in house manufacturing facility spanning 6,696 square feet in Hyderabad, expected to become operational before the end of the first half of FY2027. It has also opened a sales office in Vijayawada, Andhra Pradesh in November 2025, and plans to set up an additional office in Bengaluru in FY2027 to deepen its presence across South India.

IPO BASICS

Fresh Issue Rs. 250 Crores	Offer for Sale 1,18,48,340 Shares
Face Value Rs. 2 per Share	Price Band To Be Announced
Issue Opens September 1, 2026	Issue Closes September 3, 2026
Listing BSE and NSE	Anchor Bidding August 31, 2026

This is a mainboard IPO conducted through the book building process. The fresh issue of Rs. 250 Crores (Rs. 25,000 Lakhs) will be used entirely for working capital and general corporate purposes. The offer for sale of up to 1,18,48,340 equity shares is being made by promoters Ashish Agarwal (up to 59,24,170 shares) and Seema Agarwal (up to 59,24,170 shares). The company will receive no proceeds from the OFS portion.

The price band has not been disclosed in this Red Herring Prospectus and will be announced prior to opening. Based on restated financials, the basic and diluted EPS for FY2026 is Rs. 12.78, for FY2025 is Rs. 4.95 and for FY2024 is Rs. 2.97. The weighted average EPS over the three year period (FY2026 given highest weight of 3) is Rs. 8.54.

The net asset value per share as of March 31, 2026 is Rs. 29.03. Pre offer promoter holding stands at 99.98% of total equity shares. The issue managers are Emkay Global Financial Services Limited and Valmiki Leela Capital Private Limited, with Bigshare Services Private Limited as the registrar.

USE OF PROCEEDS

The company proposes to utilise the net proceeds from the fresh issue of Rs. 250 Crores towards two objects. The primary allocation of Rs. 215 Crores (Rs. 2,150 million) is for funding long term working capital requirements towards procurement, maintenance and scaling up of inventory. Of this, Rs. 125 Crores will be deployed in FY2027 and Rs. 90 Crores in FY2028. The balance net proceeds, not exceeding 25% of the gross proceeds, will be used for general corporate purposes.

The working capital requirement arises from the B2B business model that requires upfront gold procurement while extending credit of 25 to 45 days to customers. Trade receivables grew from Rs. 88.45 Crores in FY2024 to Rs. 252.36 Crores in FY2026, primarily driven by higher sales volumes and orders received through India International Jewellery Show exhibitions.

The company is expanding to new sales offices in Vijayawada and Bengaluru, which will require additional finished goods inventory for display at each location. As of July 31, 2026, the company had utilised working capital loans of Rs. 82.98 Crores (Rs. 829.79 million) from Yes Bank Limited.

The objects have not been appraised by any external bank or financial institution. No portion of the net proceeds will be used for acquiring any virtual digital assets or for investing in equity shares of other listed companies.

FINANCIAL PERFORMANCE

Revenue and Profitability

Particulars	FY2024	FY2025	FY2026
Revenue from Operations (Rs. Cr)	1,024.57	1,397.01	1,926.68
EBITDA (Rs. Cr)	35.77	56.01	146.34
EBITDA Margin (%)	3.49%	4.01%	7.60%
PAT (Rs. Cr)	24.35	40.58	104.79
PAT Margin (%)	2.37%	2.90%	5.44%
Return on Equity (%)	30.30%	35.95%	56.45%
Return on Capital Employed (%)	22.76%	30.60%	52.08%
Debt to Equity Ratio	0.84	0.61	0.47
EPS Basic and Diluted (Rs.)	2.97	4.95	12.78

Revenue from operations grew at a compound annual growth rate of 37.13% from Rs. 1,024.57 Crores in FY2024 to Rs. 1,926.68 Crores in FY2026. EBITDA margin expanded from 3.49% in FY2024 to 7.60% in FY2026, reflecting improving operating leverage, better procurement efficiencies and scale benefits.

PAT grew from Rs. 24.35 Crores to Rs. 104.79 Crores over the same period, a growth of over 330%. The company has progressively reduced its debt reliance, with the debt to equity ratio declining from 0.84 in FY2024 to 0.47 in FY2026. Total equity increased from Rs. 92.55 Crores to Rs. 238.07 Crores over the three year period.

Cash Flow and Working Capital

Operating cash flows were positive at Rs. 4.85 Crores in FY2024 but turned negative in FY2025 (outflow of Rs. 9.86 Crores) and FY2026 (outflow of Rs. 14.73 Crores). This was primarily driven by rapid growth in trade receivables, consistent with the company's expansion strategy.

Trade receivables stood at Rs. 252.36 Crores in FY2026, up from Rs. 88.45 Crores in FY2024. Debtor days stood at 36 in FY2026 compared to 32 in FY2024. Total borrowings increased to Rs. 111.12 Crores in FY2026 from Rs. 77.93 Crores in FY2024. The company has no contingent liabilities as of March 31, 2026.

PEER COMPARISON

CRISIL has identified the following listed companies as peers for the purposes of the Basis for Offer Price disclosure. Deepa Jewellers operates as a B2B jewellery processor focused on South India, which differs in business model and geographic scope from most listed peers. The price band has not yet been disclosed, and accordingly the company's P/E ratio cannot be calculated for this report.

Company	Revenue FY26 (Rs. Cr)	EPS FY26 (Rs.)	RoNW FY26 (%)
Deepa Jewellers Limited	1,926.68	12.78	56.45%
Sky Gold and Diamonds Ltd	4,708.38	13.97	23.88%
Shanti Gold International Ltd	2,018.71	21.22	37.34%
Shringar House of Mangalsutra Ltd	2,245.82	13.55	26.29%
RBZ Jewellers Ltd	636.48	13.70	20.11%
Khazanchi Jewellers Ltd	2,049.22	36.10	32.45%

Among listed peers, the industry P/E range is 10.08 times (lowest) to 57.56 times (highest) with an average of 23.92 times, computed on FY2026 diluted EPS and closing prices as of August 21, 2026. Deepa Jewellers delivers the highest return on net worth of 56.45% among the peer set, significantly above the peer range of 20.11% to 37.34%.

Its revenue base of Rs. 1,926.68 Crores places it as a mid scale player relative to peers with Rs. 2,000 to Rs. 4,700 Crores revenue. The company's specialist focus on vaddanam and CNC machine cut bangles for South Indian retail chains differentiates it from peers with broader or national distribution.

KEY RISKS

Customer and Revenue Concentration

The top 10 customers contributed 64.67% of revenue from operations in FY2026. No long term contracts exist with any customer, meaning any reduction in orders from key accounts could materially impact revenue and cash flows. Additionally, two product categories, vaddanam (41.85%) and CNC machine cut bangles (30.87%), together accounted for 72.72% of FY2026 revenue. Any shift in consumer preferences away from these product lines could adversely affect the business.

Geographic Concentration

Revenue from South Indian states accounted for 94.37% of total revenue in FY2026. This concentration in Telangana, Tamil Nadu, Andhra Pradesh, Karnataka and Kerala exposes the business to regional economic, geopolitical, natural disaster and local market risks. Any adverse event in these geographies could disproportionately affect operations, supply chains and customer relationships.

Gold Price Volatility and Procurement Risk

Gold is the primary raw material. Average gold prices have risen sharply from Rs. 60,624 per 10 grams in FY2024 to Rs. 1,15,996 per 10 grams in FY2026. The company uses gold metal loans (GML) and forward contracts on commodity exchanges for hedging, but these instruments do not cover 100% of inventory. Significant price movements can affect procurement costs, inventory valuation and profitability. Top 10 suppliers accounted for 91.81% of total purchases in FY2026, with no long term supply agreements in place, exposing the company to supply disruption risk.

Negative Operating Cash Flows

Operating cash flows were negative in FY2025 (Rs. 9.86 Crores outflow) and FY2026 (Rs. 14.73 Crores outflow), driven by rapid trade receivable growth and upfront gold procurement requirements. If the company is unable to convert its growth into sustained positive operating cash flows, it may face constraints in funding operations and growth plans without additional external borrowings.

Dependence on Third Party Karigars

All manufacturing is outsourced to 41 karigars on a non exclusive basis. As of July 31, 2026, formal agreements exist with only 29 of the 41 karigars. Competitors can offer incentives to attract these karigars, and any disruption in karigar availability could impair production schedules, product quality and financial performance. There is no assurance that the current karigar network will remain available on commercially acceptable terms in the future.

Unsecured Promoter Loans

The company has availed unsecured loans from promoters Ashish Agarwal, Seema Agarwal and Dev Agarwal. As of FY2026, outstanding promoter loans totalled Rs. 43.65 Crores (Rs. 436.54 million). These loans are repayable on demand subject to lender consent from Yes Bank Limited, and a sudden demand for repayment could strain liquidity and working capital at short notice. The company also carries total outstanding borrowings of Rs. 1,274.07 million (approx. Rs. 127.41 Crores) as of July 31, 2026, with restrictive covenants requiring lender consent for major corporate actions.

KEY POSITIVES

Exceptional Revenue Growth and Margin Expansion

Revenue from operations grew at a CAGR of 37.13% over FY2024 to FY2026, reaching Rs. 1,926.68 Crores. EBITDA margin expanded from 3.49% to 7.60% over the same period. PAT grew by over 330%, from Rs. 24.35 Crores to Rs. 104.79 Crores, with PAT margin improving from 2.37% to 5.44%. This combination of high volume growth and expanding profitability reflects both market demand and operating leverage in the business model.

Highest Return on Equity Among Listed Peers

Deepa Jewellers delivered a return on equity of 56.45% and a return on capital employed of 52.08% in FY2026, the highest among the disclosed peer set. This reflects the high capital efficiency of the outsourced manufacturing model and the company's ability to translate revenue growth into PAT without proportionate capital deployment.

Asset Light and Scalable Business Model

The outsourced karigar model eliminates the need for company owned manufacturing plants, significantly reducing fixed capital expenditure and enabling rapid capacity scaling in response to demand. The company has expanded its processing capacity from 2,155 kg per annum in FY2024 to 2,925 kg per annum in FY2026 without major capital investments. The planned in house manufacturing facility in Hyderabad is intended to complement this model for higher complexity designs, not replace it.

Established Positioning in South India B2B Jewellery

According to CRISIL, South India accounts for 38 to 43% of national jewellery consumption. Deepa Jewellers is recognised as one of the key processors and suppliers of vaddanam and CNC machine cut bangles in South India. It serves 47 jewellery retail chains and 326 standalone stores including major names such as Kalyan Jewellers and Joyalukkas, with 373 total customers as of July 31, 2026. The South Indian gems and jewellery retail market was valued at Rs. 5,026 billion in FY2026 and is projected to grow at a CAGR of 6 to 7% through FY2030.

Improving Balance Sheet Strength

The debt to equity ratio declined from 0.84 in FY2024 to 0.47 in FY2026, indicating consistently improving financial health. Total equity grew from Rs. 92.55 Crores to Rs. 238.07 Crores over three years. The company has no contingent liabilities as of March 31, 2026. The fresh issue proceeds of Rs. 250 Crores are expected to further strengthen the working capital position and reduce near term dependence on short term bank borrowings and promoter loans.

Experienced and Committed Promoter Team

Promoter and Chairman and Managing Director Ashish Agarwal has 25 years of experience in the gems and jewellery industry, having started in 2001 through a partnership firm. Co promoter Seema Agarwal has been equally involved in building the business since inception. Whole Time Director Dev Agarwal brings technology oriented thinking and contemporary management perspectives to support the company's next phase of growth. The leadership team's depth of sector knowledge, trade relationships and experience in South Indian jewellery markets provides a strong foundation for the proposed expansion.