Shanti Gold International IPO: Polished for Growth, Priced for Belief - What Should Investors Do?

About the Issue:

The Initial Public Offering (IPO) of Mumbai-based gold jewellery manufacturer Shanti Gold International opens for subscription on July 25 and will close on July 29.
Ahead of the IPO launch, the company successfully raised Rs 108.03 crore through its anchor book on July 24. Notable participants in the anchor round included Societe Generale, Wealthwave Capital Fund, Vijit Growth Fund, Founders Collective Fund, Smart Horizon Opportunity Fund, Swyom India Alpha Fund, and Sunrise Investment Opportunities Fund, among a total of 15 investors.
Choice Capital Advisors is acting as the book-running lead manager for the IPO, while Bigshare Services has been appointed as the registrar.
The basis of allotment is expected to be finalised on July 30, and the company's equity shares are proposed to be listed on both the BSE and NSE, with a tentative listing date of August 1.

See details below:

Utilisation of IPO Proceeds:

Shanti Gold International plans to utilise the net proceeds from the IPO towards multiple strategic initiatives. A portion of the funds will be allocated for setting up a proposed manufacturing facility in Jaipur, while Rs 200 crore will be earmarked for working capital requirements. Additionally, around Rs 17 crore will be used for repayment of existing debt, with the balance reserved for general corporate purposes.

Promoter Holding:

The company is promoted by Pankajkumar H Jagawat, Manojkumar N Jain, and Shashank Bhawarlal Jagawat.

• Pre-issue shareholding: 99.99 per cent
• Post-issue shareholding: 74.89 per cent

Company Profile:

Incorporated in 2003, Shanti Gold International Limited is a Mumbai-based gold jewellery manufacturer specialising in high-quality 22kt CZ (cubic zirconia) casting gold jewellery. The company is known for its intricate designs and wide product offerings, including bangles, rings, necklaces, and jewellery sets suited for weddings, festive occasions, and everyday wear across various price points.

Shanti Gold has built long-standing relationships with reputed jewellery retailers such as Joyalukkas, Lalitha Jewellery, Alukkas Enterprises, Vysyaraju Jewellers, and Shree Kalptaru Jewellers, among others. As of May 31, 2025, the company operates across 15 states and 1 union territory, with branch offices in key cities like Mumbai, Bengaluru, Chennai, and Hyderabad.

The company has an in-house manufacturing facility spread over 13,448.86 sq. ft. in Andheri East, Mumbai, with an annual installed capacity of 2,700 kg. It ensures end-to-end control over design, production, and packaging, leveraging advanced machinery and outsourcing selective labour-intensive processes such as manual stone setting to maintain precision and craftsmanship.

A team of 80 CAD designers produces over 400 gemstone-studded CZ gold jewellery designs monthly, using advanced computer-aided design technology to deliver modern, detailed, and customized jewellery collections.

Industry Outlook
The global jewellery industry rebounded post-pandemic, growing at a 9 per cent CAGR between CY19 and CY23 to reach Rs 19.5–20.3 lakh crore. It is projected to grow to Rs 25.6 lakh crore by CY29, driven by economic recovery and demand from emerging markets.

India’s G&J sector contributes around 7 per cent to GDP and 15 per cent of total exports, with India being the world leader in diamond cutting (processing over 90 per cent of polished diamonds globally).

• Market Size: Valued at Rs 4.11 lakh crore in CY23, expected to grow by 13.1 per cent to Rs 4.65 lakh crore in CY24, and reach Rs 7.16 lakh crore by CY29.
• Wholesale Segment: Reached Rs 2.58 lakh crore in CY23, growing at 28.4 per cent CAGR from CY20.
• Demand Drivers: Weddings, festivals, rising middle class, and growing demand for lightweight and branded jewellery. South India leads demand with a 42 per cent share, followed by West (24 per cent), North (20 per cent), and East (14 per cent).

Financials 

(Source – Company’s RHP)

Balance Sheet Snapshot

(Source – Company’s RHP)

Key Metrics

(Source – Company’s RHP)

*The cash flow from operations has been persistently negative, and the deficit has widened over the years.

Key ratios

(Source – Company’s RHP)

Earnings Quality vs Management Rationale

Shanti Gold’s revenue rose from Rs 679 crore in FY23 to Rs 1,106 crore in FY25 (17.7 per cent CAGR), but its cash metrics raise concerns. Trade receivables surged 21 per cent CAGR to Rs 182 crore, absorbing 16.4 per cent of revenue (vs 15.1 per cent in FY23). Operating cash flow stayed negative for the third straight year, worsening from Rs 5 crore to Rs 15.3 crore. Inventory ballooned 53 per cent CAGR to Rs 487 crore (44 per cent of sales). These trends typically point to stretched credit, aggressive revenue booking, or weak offtake.

Management’s Rationale:

1. Working capital model: The company claims clean collections and nil expected credit losses due to strong customer screening.
2. Temporary strain: FY25 cash deficit stems mainly from the Rs 103 crore receivable jump; FY24’s shortfall was due to Rs 43 crore of election-related stocking and Rs 30 crore in fixed deposits for a gold metal loan.
3. Planned infusion: Rs 200 crore from IPO proceeds is allocated to working capital in FY26, anticipating Rs 262.2 crore of receivables.
4. Inventory rationale: Jewellery inventory requires variety across sizes, styles, and regions. Stocking also supports trade exhibitions and the upcoming Jaipur facility.

While the explanations clarify why receivables and inventory are growing, they do not fully address cash conversion weakness. IPO funds may offer near-term support, but long-term sustainability will depend on reducing the cash cycle through quicker collections and improved inventory turnover as capacity expansion and growth plans play out.

Listed Peer Comparison 

(Source- Screener.in and Company’s RHP)

Strengths:

Shanti Gold boasts a wide product portfolio of 22kt CZ casting jewellery, backed by a strong in-house manufacturing setup and a skilled design team. The company benefits from experienced promoters, robust execution, and long-standing relationships with top jewellery brands. It maintains a stable financial model and is strategically expanding into North India and international markets. The upcoming Jaipur facility and product diversification into machine-made plain gold jewellery aim to tap new demand segments. Proceeds from the IPO will also support working capital needs to scale operations.

Weaknesses:

The business is heavily reliant on its top 10 customers, who contributed over 33 per cent of revenue in each of the last three fiscals, posing concentration risk. Additionally, 72.76 per cent of revenue in FY25 came from South India, exposing it to regional economic and market risks. The current product concentration in 22kt CZ jewellery also makes it vulnerable to shifts in consumer preferences and demand volatility, which could impact future growth and financial performance.

Outlook and Valuation:

Shanti Gold International Limited is positioning itself as a fast-growing, design-led, B2B-focused manufacturer in India’s organized gold jewellery space, with a niche in 22kt CZ casting jewellery. The company has demonstrated strong revenue growth, geographical expansion, and deepening relationships with top-tier clients such as Joyalukkas and Lalitha Jewellery. Backed by integrated manufacturing, a robust product portfolio, and capacity expansion plans through its upcoming Jaipur facility, Shanti Gold aims to capitalize on the rising demand for both bridal and machine-made jewellery, while also tapping into export opportunities via trade shows in the USA and UAE.

At the upper price band of Rs 199, the IPO values the company at a FY25 P/E of 25.7x and EV/EBITDA of 17x, suggesting premium pricing compared to RBZ Jewellers (P/E 14x) and nearly at par with Sky Gold (P/E 28.6x). While its market-cap-to-sales ratio of 1.30x is on the higher side, its superior ROCE of 26.2 per cent and ROA of 15.0 per cent provide justification for the valuation premium. Post-IPO, the company's balance sheet is expected to improve significantly, with debt-to-equity dropping from 1.60x to around 0.44x, reducing leverage concerns. Moreover, the IPO is entirely fresh capital, enhancing liquidity to fund working capital and repay Rs 17 crore of debt, thereby supporting scalable operations.

However, concerns persist around negative operating cash flows and a working capital-intensive model, with rising receivables and inventory levels. The company’s response—highlighting strong collection history, strategic inventory buildup, and a high-quality client base—somewhat mitigates this risk, but investors must monitor future cash flow conversion closely.

Recommendation:

Given its robust revenue growth, improving return ratios, strategic expansion plans, and post-issue debt reduction, Shanti Gold International Ltd offers long-term structural growth potential in India’s evolving jewellery market. While the IPO is fully priced, its premium valuation is supported by brand associations, scalability, and export potential. Investors with a high-risk appetite and long-term horizon may consider a ‘SUBSCRIBE – LONG TERM’ rating, with the expectation of sustained growth, margin stability, and improvement in cash flows post-capacity expansion.