Planning to subscribe to Motisons Jewellers IPO? Know key risks involved before applying

Motisons Jewellers IPO was fully subscribed on its first day within a few minutes of opening, led by retail and non-institutional investors (NIIs). Motisons IPO has been booked 15.02 times at the end of day 1.

On the first day of bidding, Motisons Jewellers IPO’s retail investors’ portion was subscribed 22.24 times, the NII portion was subscribed 13.82 times, and the QIB portion was booked 8%.

The company raised  ₹36.3 crore from anchor investors on December 15, which saw participation from only two investors.

However, it is necessary to know the key risks involved before subscribing to the issue. 

Here are the top 10 key risk factors mentioned in the Motisons Jewellers IPO RHP –

1. The company, promoters, and directors are involved in certain legal proceedings. Any adverse decision in such proceedings may render us/them liable to liabilities /penalties and adversely affect our business and results of operations.
2. Promoters Sanjay Chhabra and  Sandeep Chhabra, in the past, were involved in proceedings initiated by the investigation agency about betting in the cricket matches of the Indian Premier League. Though they have been duly discharged, any re-opening of the matter could harm its business and reputation
3. The company is dependent on third parties for supplying most of our products. The company may be unable to maintain or establish formal arrangements with such third parties, and any disruptions at such third-party production or manufacturing  facilities and their supply chain arrangements, or failure of such third parties to adhere to the relevant quality standards may harm our reputation, business and financial condition
4. The inability to respond to changes in consumer demands and market trends promptly and to maintain an optimal level of inventory in the company’s showrooms may impact our operations adversely. We have above average Inventory turnover days in comparison to our listed peers in the line of trade we operate.
5. The company has significant working capital requirements and operates on a high debt-to-equity ratio. If we are unable to secure adequate working capital loans on commercially reasonable terms it could have a material adverse effect on our business, financial condition, and results of operations.
6. All showrooms of the jewelry manufacturer are in one geography i.e. Jaipur, Rajasthan. Any adverse development affecting such a region may harm the business, prospects, financial condition, and results of operations.
7. The company has in the past entered related party transactions and may continue to do so in the future.
8. The occurrence of natural or man-made disasters or outbreaks of global pandemics, such as the COVID-19 pandemic, could adversely affect the results of operations, cash flows, and the financial condition of the company. Hostilities,  terrorist attacks, civil unrest, and other acts of violence could adversely affect the financial markets and our business.
9. The agreements governing the indebtedness contain conditions and restrictions on our operations, additional financing, and capital structure.
10. The company’s income and sales are subject to seasonal fluctuations and lower income in a peak season may have a disproportionate effect on the results of operations.

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Published: 19 Dec 2023, 09:02 AM IST