BlueStone IPO: A Glittering Success or Not?

You know what they say, "Diamonds are forever". But is BlueStone's IPO set to shine just as brightly, or will it fade before it hits the market?

If you're looking to dive into the world of jewellery with some serious investment potential, BlueStone's upcoming IPO might have caught your attention.

The company plans to raise ₹1,000 crore by offering 2.398 crore shares via the Offer for Sale (OFS). But, like any shiny new opportunity, the real question is. "Is this the right investment"?

While BlueStone has had success online, being a public company comes with a whole new set of challenges. With competition heating up and market conditions in flux, we can only guess how BlueStone's IPO will perform.

Ready for the full story behind this IPO? Let's go!

Table of Contents:

• IPO Details
• Company's Basic Details
• Company's Financials
• Operating Performance
• Company's Competitors

BlueStone IPO Details

BlueStone Jewellery and Lifestyle was founded in Bengaluru by Gaurav Singh Kushwaha in 2011. It is one of India's largest online jewellery retailers, with its revenue surging 64% in FY24, proving its increasing presence in India.

Since its launch, the company has been offering everything from diamond rings to platinum necklaces, trendy gold bangles and more.

Wanna know something interesting? Originally, BlueStone planned to go public in 2022. But decided to hold off and raise funds through private equity instead.

However, the company is finally set to open the gates and offer fresh shares worth ₹1,000 crore, with 2.398 crore shares available through OFS.

Out of the ₹1,000 crore, ₹750 crore will help BlueStone fund its working capital needs. Basically, it'll give the company some breathing room to keep growing. Now, the remaining ₹250 crore? That's a bit hazy for now. The company has hinted at using the money for general corporate purposes, but it's important to know that it can't use more than 25% of the gross proceeds for this.

Before you dive in any further, you might be curious about who's pulling the strings behind the scenes. A little deeper into BlueStone's shareholding shows some interesting names in the mix. About 81.53% of the company's shares are held by the public shareholders and 18.47% by promoters and promoter groups.

A lot of those public shareholders are planning to divest their stake in the company in this OFS. Let's take a closer look:

A few other players, like Kalaari Capital Opportunities Fund and IvyCap Ventures Trust, are also looking to exit. And here's an interesting tidbit: the promoter, Gaurav Singh Kushwaha, made a pre-IPO investment of ₹75 crore in BlueStone to fulfil the minimum contribution requirement for the IPO. This brings his stake to a cool 17.18%. Talk about buying in early, right?

BlueStone's Journey: From Startup to Jewellery Giant

The company isn't just focused on online sales. BlueStone has an omni-channel retail experience, meaning customers can shop both online and in physical stores, which adds flexibility to their purchasing experience. With 203 stores across 86 cities and 12,600+ pin codes covered, the company is making sure that it caters to all.

Interesting Fact: The company even opened its first offline store in 2018 in Delhi's Pacific Mall, expanding rapidly to other locations like Mumbai, Hyderabad, and Chandigarh.

The real kicker? BlueStone's in-house manufacturing capabilities control the production process through facilities in:

• Mumbai
• Jaipur
• Surat

This allows the company to keep quality in check, reduce production time, and mitigate risks. All this translates to more sales and happier customers.               

See why the company stands out? It's because it controls its production, offers unique jewellery, uses modern technology for a better customer experience, and has a wide presence across India. This combination helps it attract and serve over 5.6 lakh customers effectively.

The one thing that might be a blockage in the company’s progress is the changing trends. People in general are more into minimalist, everyday wearable jewellery pieces instead of gem studded & heavy ones. This shift in preference has resulted in the birth and rapid growth of brands like Giva, Mia & Caratlane. 

The industry’s clientele mostly consist of individuals who prefer timeless pieces aligning everyday style such as delicate chains, simple ear studs, and elegant rings. Plus, the jewellery market in India is growing fast, further working as a catalyst for the newcomers.

BlueStone's Financials

Okay, let's talk about the financials. If you're eyeing BlueStone's IPO, you're probably wondering how the company is performing financially. Let's break down their performance over the last few years.

Let's break this down:

• Revenue Growth: From FY22 to FY24, BlueStone's revenue more than doubled. This indicates strong growth, and in a competitive market like jewellery, that's a big deal.
• Gross Profit Margin: This number is growing, which shows that BlueStone is becoming more efficient at turning sales into actual profit. The increase from 31.87% in FY23 to 40.41% in FY24 is a sign of improving operational efficiency.
• EBITDA: BlueStone turned its negative EBITDA into positive territory in FY24, which indicates they're getting better at managing costs and scaling their business.
• Net Debt: This is another positive indicator. The company reduced its debt from ₹1,833.89 Crore in FY22 to ₹325.92 Crore in FY24, which is a solid move toward financial stability.

But… the losses are still there although it did narrow slightly to ₹142.23 crore in FY24 from ₹167.24 crore in FY23. Its inventory turnover on the hand has declined to 1.83 from 2.75 suggesting inefficiency in inventory management and overstocking. This could be another concerning matter to keep a note of.

Operating Performance

When it comes to customer growth, BlueStone's numbers look good:

So, BlueStone's customer base has grown by 115.38% from FY22 to FY24. The average order value is steadily increasing, which means customers are buying higher-value pieces.      

On the plus side, BlueStone's revenue growth (64% from FY23 to FY24) is impressive, and its efforts to expand (to 400 stores by FY25) both online and offline are positioning it for long-term success.

Bluestone’s Competitors: Who is on Top?

While researching for this upcoming IPO, one of the biggest questions in my mind was who is leading the jewellery market. Sure, Bluestone is a new entree focused on e-commerce & online-to-offline channels. However, it still faces competition from the existing players in the market, especially the ones who follow the traditional route of the jewellery industry.
Competitors like PC Jeweller, Kalyan Jewellers, Titan, etc., have both strong brand recognition and extensive distribution networks as their strengths. Bluestone, on the other hand, has a big advantage in its hand. It excels in reaching out & catering to younger demographics via its digital expertise.

Have a look at the table above. It portrays where Bluestone stands fundamentally when compared to older players like PC Jeweller and Kalyan Jewellers. In FY24, the company achieved the highest gross margins (40.41) among industry leaders, driven by its in-house manufacturing capabilities and customer-centric approach.

However, the negative PAT figures and ROCE (-5.25) give the notion that the company is not generating enough profit to cover the expenses and is in losses, which we already discussed above.

The Bottom Line

BlueStone's IPO is attracting a lot of attention, but before you jump in, let's think this through. Jewellery trends are shifting, and with a growing demand for minimalistic designs, BlueStone might not be the trendsetter it once was. And that's where competition from brands like Mia by Tanishq, CaratLane by Titan, and Giva comes in. They've already got their foot firmly planted in the "modern, chic" space that’s appealing to younger buyers.

BlueStone has built a great online presence, but when it comes to standing out in a market flooded with options, will it be enough? Or is this a case of “same product, new packaging,” especially when the competition is already offering similar styles? With the jewellery market becoming more fragmented, BlueStone's IPO might face a lot more pressure than it thinks. So, what do you think? Let's hear your thoughts!

*Disclaimer: The stocks, companies, and policies discussed above aren't recommendations from Finology Insider and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making investment decisions.