Shubhlaxmi Jewel Art Ltd. (SJAL) IPO Closes on 27th Nov, Should you Avoid?

Shubhlaxmi Jewel Art Ltd. plans to raise Rs.6.51 crore through the issue of 2,504,000 equity shares at a fixed price of Rs.26 per share. Lets Analyse whether the SJAL IPO is worth investing.

SJAL is into manufacturing and trading of gold, silver, diamonds and platinum ornaments. The company caters to the customer across all the three segments, comprising high-end, mid-end and value market segments.

Shubhlaxmi Jewel Art Ltd. Profile

• SJAL offers a wide range of Products categories in their portfolio including Traditional, Indo-Western and Modern Style, that comprises of Necklaces, Mangalsutras, Patla, Chains, Kandoro, Payal, Poncho and Rings among its wide variety of wedding collections.
• The company has a showroom in Bhavnagar only, that was setup in the year 2013 having the total area of 27000 Sq. Ft. The company is planning to open a manufacturing facility in Bhavnagar to cater to the demand of local customers by 2019. For this the company has taken 962 Sq.ft of land on rent.
• In addition to the retail operations, SJAL sell the jewelries on a wholesale basis to other jewellery retailers in Gujarat. The company also make ornaments on order as per specific requirements of the customers. After this, the same are manufactured by third party manufacturers on job work basis.

SJAL IPO Details

The net Proceeds from Issue will be utilized to meet working capital requirements of the company, Offer related expenses and general expenses of the corporate.

• Issue Open: November 22, 2018 – November 27, 2018
• Issue Type: Fixed Price Issue IPO
• Issue Size: 2,504,000 Equity Shares of Rs 10 aggregating up to Rs 6.51 Cr
• Issue Price: Rs 26 Per Equity Share
• Market Lot: 4000 Shares
• Minimum Order Quantity: 4000 Shares
• Listing At: NSE SME

Should you Invest?

The company is situated at one place only and gets revenue from Gujarat only. Further, the company does not assure that the demand of products with the consumers will continue to grow and they will be able to develop styles of the product as per the latest trend or meet the rapidly changing demands of the customers.

Further, the company has delivered the revenue of Rs.47.43 cr in FY 16, Rs.43.43 cr in FY 17 and Rs.46.85 cr in FY 18, which is not showing so much of growth. The company has posted the profit of Rs.0.36 cr in FY 16, Rs.0.64 cr in FY 17 and Rs.0.82 cr in FY 18. The investors should “Avoid” Shubhlaxmi Jewel Art Ltd. IPO.