Kalyan Jewellers to raise up to $ 200 mn, overseas bond gets S&P ‘B’ rating

Kalyan Jewellers will raise up to $ 200 million through its subsidiary, Kalyan Jewellers FZE, to refinance old debt. The subsidiary will issue senior US dollar-denominated fixed-rate notes (bonds).

Rating agency Standard and Poor’s (S&P) has assigned a preliminary ‘B’ long-term issuer credit rating to Kalyan Jewellers India Ltd (KJIL) and the proposed senior secured notes issued by Kalyan Jewellers FZE.

Proceeds from the notes will be used for refinancing borrowings, payment of transaction fees, and general corporate purposes. KJIL will guarantee the notes proposed to be listed on the Singapore Stock Exchange. Issuance for the notes is subject to market conditions.

S&P said in a statement that the jewellery retailer benefits from its good market position in the domestic organized jewelry market, with favorable growth prospects and resilient demand.

However, KJIL’s limited scale, operations in a highly fragmented market, high leverage, and short track record in the capital markets constrain its credit profile, the rating agency said.

The outlook on the financial instrument is stable reflecting the expectation that the company will maintain its market position and steady revenue growth, and manage leverage and liquidity prudently even as it expands.

Kalyan Jewellers is the second-largest player in India’s organised jewelry retail market, after Tanishq owned by Titan Co. Ltd.

Kalyan Jewellers had 151 showrooms and 853 My Kalyan outlets as of December 31, 2021. The company is likely to generate about $1.4 billion in revenue and $110 million in EBITDA in fiscal 2022.

Its market share was only about 2 per cent of India’s $ 60-billion jewellery retail market. This market is dominated by unorganized players, which have about a 70% share.

Given forecast revenue of US$1.5 billion-US$1.7 billion over the next two years, the company’s scale is small. Also, it has geographic concentration in India and a small presence in the Middle East, unlike higher-rated peers such as Signet Jewelers Ltd. Signet has over $ five billion in revenue and operates in multiple countries, it added.

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