Deepa Jewellers has opened a new 6,700-square-foot manufacturing facility in Hyderabad to reduce its reliance on third-party artisans. The company, which recently completed a Rs 250 crore IPO, is also expanding its product range and footprint in South India. Investors should monitor how this move to in-house production impacts margins and if the company can reduce its heavy dependence on large retail chains.
Deepa Jewellers Limited (DJL) is stepping up its production capabilities with the launch of a new 6,700-square-foot manufacturing facility in Hyderabad. This shift is part of a broader strategy to move away from complete reliance on third-party artisans, allowing the company to gain better control over quality and delivery times. By bringing production in-house, the firm aims to optimize costs and streamline operations.
Alongside this manufacturing push, the company is expanding its portfolio by introducing 22 new product stock-keeping units, including specialized designs like paper casting and nakshi Kundan. To support these creative efforts, the design team is being expanded by 33 percent. Geographically, the firm is strengthening its presence in South India, with a new sales office already active in Vijayawada and plans to open a second office in Bengaluru.
The company’s financial position has strengthened following its Rs 250 crore initial public offering earlier this month. The debt-to-equity ratio has dropped to 0.23x, down from 0.47x, indicating improved financial health. Regarding market valuation, the stock is currently trading at 8 times its projected FY2028 earnings. When compared to some industry peers, such as Sky Gold & Diamonds, Shringar House of Mangalsutra, and Shanti Gold International, the stock is trading at a discount.
While the expansion plans and deleveraged balance sheet are notable, there are specific areas for investors to watch. A significant part of the company’s business—about 75 percent of total revenue—comes from large retail chain partners. This high level of customer concentration means the company’s stability is closely tied to the performance and decisions of these few large clients. Additionally, the success of the new manufacturing strategy depends on the company's ability to efficiently manage internal production and execute its growth plans in Tier 2 and Tier 3 markets. Whether the company can maintain its projected profit growth of 46 percent through fiscal year 2028 will remain a key focus for shareholders in the coming quarters.