Deepa Jewellers Ltd

Deepa Jewellers Limited

Incorporated in 2016 and based in Hyderabad, Deepa Jewellers designs and supplies hallmarked 22 karat gold jewellery to jewellery retail chains and standalone stores (B2B), majorly in South India. Manufacturing is outsourced to a network of 41 karigars. Key products are vaddanam at 41.85% of FY26 revenue and CNC machine cut bangles at 30.87%. South India was 94.37% of revenue. Customers include Joyalukkas, Kalyan Jewellers, Lalithaa Jewellery and TBZ.

Auditor : NSVR & Associates LLP         BRLMs : Emkay Global Financial Services, Valmiki Leela Capital

Disclaimer - Delta Partners (public market division under Dexter Capital) is not a SEBI registered Investment Advisor and this report does not constitute a recommendation but is only prepared for educational purposes. We (our team members including our directors) may or may not apply to IPO. Queries: shubham@deltainvest.in This note is not reviewed by our CIO - Devendra Agrawal, CFA. It is prepared by our team of Investment Analysts, and is reviewed by our senior team members. 

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Deepa Jewellers designs 22 karat gold jewellery and sells it to retailers across South India, with its largest product being vaddanam (a gold waist belt worn at weddings) at 42% of FY26 revenue. Revenue rose 88.0% between FY24 and FY26, while the gold price rose 91.3% and the quantity of jewellery sold fell 5.5%, so the surge in gold prices accounts for almost all of it. Working capital climbed from ₹158 cr to ₹345 cr over two years and profit has not turned into cash, with cumulative operating cash flow of negative ₹19.7 cr against ₹180 cr of post-tax EBITDA. A business with an 8% gross margin, no manufacturing of its own, growth that came from gold rather than from volume, and profits that have not turned into cash does not offer us enough comfort at an IPO ask of 16.2x P/E and 10.7x EV/EBITDA.

At the current GMP of ~14% (3 September 2026), the issue points to modest listing gains at best, if it sustains. However, it is important to note that GMP has been a poor guide of late and has been unstable. For example in recent IPOs: Skyways Air Services had a 30% GMP and listed 10% below its issue price, Symbiotec Pharmalab carried 27% and listed flat, and Annu Projects carried 8% and listed 24% below issue.

• Deepa Jewellers designs 22 karat gold jewellery and sells it to jewellery retailers across South India with two main products as vaddanam and CNC machine cut bangles. FY26 revenue was ₹1,927 cr with profit after tax of ₹105 cr. The B2B market it serves grew at a 24.6% CAGR between FY22 and FY26, but the CRISIL report forecasts growth at 2% to 3% a year through to FY30.

• Revenue rose 37.9% in FY26 to ₹1,927 cr, and the gold price accounts for almost all of it. Average gold prices went from ₹75,842 to ₹1,15,996 per 10 grams over the year, a rise of 52.9% and Deepa's revenue per kilogram of jewellery sold rose 58.5%. This was consistent even in FY25, when the revenue grew 36.4% and revenue per kilogram increased 25.5%, amid 25.1% move in gold prices. The quantity sold fell 13.0% in FY26, from 1,889 kg to 1,644 kg. 

• Its gross margins are among the lowest in the peer set of B2B manufacturers, which have a median of 11.0% in FY26. For a business that only designs and coordinates, the margin it keeps is thin. Gross margin was 7.99% in FY26, which increased from 4.4% a year before. This increase could largely be attributed to the revenue per kg increasing by 58.5% and business mix improving, with vaddanam accounting for 41.85% of revenue in FY26 (from 34.58% in FY25) and bullion trading income falling to nil in FY26.

• Deepa does not manufacture anything itself. It designs the piece, buys the gold, and hands the metal to independent karigars who make the jewellery at their own premises and return it against a making charge. Outsourcing is normal in this industry, and the CRISIL report puts it at 70% to 75% of manufacturing, describing the standard approach as a hybrid one where firms outsource most production while retaining in-house capability selectively. Deepa outsources 100%. Listed peers Shringar, Shanti Gold and Sky Gold all run both. Deepa owns ₹9.95 cr of gross block against ₹1,927 cr of revenue, with no factory and no capacity of its own. Its first in-house facility in Hyderabad, due in the first half of FY27, receives none of the issue proceeds, and the ₹2.28 cr spent on its equipment to March 2026 came from internal accruals.

• Deepa works with a pool of 41 karigars as of July 2026, of whom only 29 are under formal agreement, the rest engaged in ongoing working relationships with none of them exclusive to the company. Contracted karigars have fallen from 34 in FY24 to 29 in FY26 while revenue rose 88%, and the making charge paid to them climbed 51% per gram over the same period. Purchases of part-made ornaments bought in from outside quadrupled to ₹236 cr, which points to the company outsourcing beyond its own karigar network to meet orders. It does not make studded jewellery, which carries better margins than plain gold, and stones, pearls and diamonds together were 0.37% of purchases.

• This business model consumes working capital, and it has increased from ₹158 cr in FY24 to ₹213 cr in FY25 and ₹345 cr in FY26. Inventory and receivables together went from ₹161 cr to ₹340 cr over those two years, a rise of 111% against revenue up 88%, with receivables alone nearly doubling in FY26 from ₹132 cr to ₹252 cr.

• Reported profit has not been turning into cash. Across FY24 to FY26 the company generated ₹180 cr of post-tax EBITDA but operating cash flow was negative ₹19.7 cr, with cash consumed in both FY25 and FY26. Gold has to be paid for upfront, which is why trade payables stand at just ₹0.09 cr, while customers take 48 days to pay. The borrowings increased from ₹77.9 cr in FY24 to ₹111 cr in FY26. Cash and bank balances stood at ₹0.10 cr at March 2026.

• At the issue price of ₹177 the company is asking for a market capitalisation of ₹1,701 cr, which is 16.2 times FY26 profit and 10.7 times EV/EBITDA. That is close to the median of the listed B2B jewellery manufacturers, where the P/E multiple ranges from 13.1x to 41.5x . The margins vary because the business mix is different in each. RBZ carries a 23.5% gross margin because roughly two thirds of its revenue now comes from its own retail stores rather than from wholesale, and Sky Gold trades at 41.5x on the back of 90% revenue growth and a capacity base of over 12 tonnes against Deepa's nil.

• Shankesh Jewellers is the closest comparison, running the same model of outsourced manufacturing through karigars with no factory of its own, and it listed in August 2026 at 13.4 times with a gross margin of 11.1% against Deepa's 8.0%. The median revenue growth across these companies over the last two years has been 41%, in a period when gold prices rallied, and a large number of companies also came for IPO during this time. For example, Shanti Gold and Shringar listed in 2025 and Lalithaa Jewellery, Shankesh Jewellers, Augmont Enterprises and Priority Jewels all came to market in the last month alone.

• The issue is large relative to the company’s size, with a major portion used to buy more inventory. The fresh issue of ₹250 cr equals 105% of the FY26 net worth of ₹238 cr, and the total offer of ₹460 cr is nearly twice it. ₹215 cr goes to buying and holding more inventory.

• The statutory auditor, NSVR & Associates LLP, was appointed in May 2025 to fill a casual vacancy after the previous auditor resigned in April 2025 citing pre-occupancy in other assignments. It is a Hyderabad firm whose listed clients are small caps, and it holds a valid peer review certificate.

Business

• Deepa Jewellers is a business-to-business designer, processor and supplier of hallmarked 22 karat gold jewellery, incorporated in 2016 and operating from Hyderabad. It sells to jewellery retail chains and standalone stores rather than to consumers, and does not own any retail stores. FY26 revenue was ₹1,927 cr with an EBITDA margin of 7.60% and profit after tax of ₹105 cr.

• It designs in-house through a team of 15 designers, then supplies gold, alloys and precious stones to a pool of 41 karigars, of whom 29 are under formal agreement, who make the jewellery to specification and return finished ornaments against making charges. Finished goods are hallmarked at government approved centres under BIS norms. A first in-house facility of 6,696 sq ft is being set up in Hyderabad and is expected to be operational in the first half of FY27.

• Revenue splits into processing at ₹1,907 cr (99.00% of FY26 revenue), job work at ₹17.2 cr (0.89%) and trading at ₹2.00 cr (0.11%). Trading was ₹86.5 cr or 6.19% of revenue in FY25, made up of surplus gold bullion imported from UAE, and fell down in FY26 as imports reduced.

• By product, vaddanam was ₹806 cr (41.85%) of FY26 revenue and CNC machine cut bangles ₹595 cr (30.87%), with the other products as gents kada, vanky, dandpatti, gundlamala haaram, kangan, earrings and other categories. The portfolio was 16 products and 110 SKUs as of 31 July 2026, weighing from 2.50 grams to 300 grams. Quantity sold was 1,644 kg in FY26 against 1,889 kg in FY25, and job work volumes were 757 kg against 485 kg.

• South India was 94.37% of FY26 revenue: Telangana ₹801 cr (41.58%), Tamil Nadu ₹453 cr (23.52%), Andhra Pradesh ₹372 cr (19.28%), Karnataka ₹114 cr (5.91%) and Kerala ₹78.5 cr (4.08%). Maharashtra at ₹107 cr (5.57%) is the only meaningful market outside the region and grew from ₹22.1 cr in FY25.

• The customer base was 373 as of 31 July 2026, made up of 47 jewellery retail chains and 326 standalone stores across 13 states and 1 union territory. Named customers include Joyalukkas, Kalyan Jewellers, Lalithaa Jewellery Mart, Chandana Brothers, Manoj Vaibhav Gems 'N' Jewellers, Tribhovandas Bhimji Zaveri, CMR Textiles & Jewellers, Bhima Jewels and R.S. Brothers Jewellers. The top 10 customers were 64.67% of FY26 revenue.

Promoters and Leadership

• Ashish Agarwal, 50, is Promoter, Chairman and Managing Director, and entered the gems and jewellery trade in 2001 through a partnership firm alongside Seema Agarwal. Both have been directors since the company was incorporated in May 2016.

• Dev Agarwal, 23, son of Ashish and Seema Agarwal, is Promoter and Whole-Time Director and joined the board in March 2021. He chairs the Risk Management Committee, which oversees the company's gold hedging policy.

• The three promoters hold 99.98% of pre-issue capital and will hold 72.96% after the offer. Chandrakala Agarwal holds the remaining 15,000 shares. The company has never raised outside equity, has no pre-IPO placement and has had no change of control in the last five years.

Financials