Kalyan Jewellers promoter to buy 2.36% stake from Warburg Pincus affiliate for ₹1,300 cr

Kalyan Jewellers India promoter Trikkur Sitarama Iyer Kalyanaraman will acquire a 2.36% stake worth ₹1,300 crore from Highdell Investment Ltd, an affiliate of U.S.-based private equity investor Warburg Pincus.

"Highdell will be selling 24,299,066 equity shares (“Sale Shares”) (representing 2.36% of the share capital of the Company) to the Promoter for a purchase price of INR 535 per share aggregating to INR 13,000,000,310 (“Transaction”). The Transaction is subject to Promoter arranging requisite funds through financing to consummate the Transaction," an exchange filing shows.

Post the transaction, the ‘promoter’ and ‘promoter group’ shareholding in the company will increase from 60.59% to 62.95%. "This is to inform that we have entered into a share purchase agreement dated August 21, 2024, with Highdell Investment Ltd," the company says.

Amid the development, the share of gems, jewellery and watches maker closed 1.27% up at ₹548.15 on the BSE. At this price, the scrip is trading 14.5% down compared to the 52-week high of ₹633.35 hit on August 24, 2024. The company's m-cap at the current price stands at ₹56,493.07 crore.

Kalyan reported revenue of ₹5,540 crore, up 27% YoY. Its India revenue growth came in at 29% YoY, driven by an acceleration in store expansion (+36% YoY) in non-south markets. Revenue from the Middle East business grew 16% YoY. Management highlighted the custom duty cut (from 15% to 6%) has helped in driving higher customer footfall.

"We upgrade our EPS estimates by ~5 for FY26, modelling revenue/EBITDA/PAT CAGRs of 30%/27%/46% over FY24-FY26E. We maintain ADD with a DCF-based revised target price of INR 600 (previous TP; INR 550). At our TP, the stock will trade at a multiple of 49x FY26E EPS," brokerage ICICI Securities said in its Q1 FY25 results analysis. The key risks highlighted included delay in showroom expansion and potentially higher competitive intensity in core south India markets.

Another brokerage Centrum in its August 14, 2024, report maintained a 'BUY' rating on the stock, with a target price of ₹652. "We believe with the divestment of non-core assets and converting our own store into FOCO may result in a lower interest burden, yet an increase in GML. Management plans to add 35/20 stores for Kalyan/Candere by Diwali while maintaining guidance of 130 stores (80/50 Kalyan/Candere) for FY25. We introduced FY27E and retained BUY, with a revised DCF-based TP ₹652 (implying 44.5x avg. FY26E/FY27E EPS)."