Deepa Jewellers' IPO reached a subscription of 1.3x by the second day, led by strong participation from retail investors. The company is raising Rs 459.72 crore for its working capital and operational needs. While early demand is steady, investors should note the risks of the jewellery business, such as gold price volatility and the company's reliance on business-to-business sales.
The initial public offering (IPO) of Telangana-based Deepa Jewellers gathered further momentum on its second day of bidding, with the total subscription reaching approximately 1.3 times by midday on September 2, 2026. The retail portion of the issue saw stronger interest, with bids covering more than 2 times the shares offered to that segment.
Deepa Jewellers is looking to raise a total of Rs 459.72 crore through this public issue. The company plans to use Rs 250 crore from the fresh issue to fund its long-term working capital requirements, specifically for procuring inventory and managing daily operations. The remaining amount comes from an offer for sale, where existing promoters, Ashish and Seema Agarwal, are selling a portion of their holdings.
Business Model and Financial Context
Unlike traditional jewellery brands that operate retail showrooms for customers, Deepa Jewellers functions primarily as a supplier of hallmarked gold jewellery to other retail chains. This business-to-business (B2B) model means the company’s financial health is tied closely to the purchasing patterns of these retail partners. Because the company deals in high-value gold, its need for working capital is high, which explains the significant allocation of IPO proceeds toward inventory management.
Before opening the IPO to the public, the company raised Rs 137.91 crore from anchor investors, including institutional names like Motilal Oswal Finvest, Tata Asset Management Company, and others. This early backing often provides a sentiment boost, though investors should view it as a reflection of institutional confidence at a specific price point rather than a guarantee of future performance.
Risks to Consider
Investors evaluating this IPO should be aware of several operational risks. The jewellery manufacturing sector is highly sensitive to fluctuations in gold prices. If gold prices become volatile, it can affect the company's profit margins and the demand from its retail partners. Additionally, the company's business relies on its ability to maintain high quality and timely supply to a concentrated client base. If a major retail partner faces a slowdown or shifts to another supplier, it could impact Deepa Jewellers' revenue.
Another point to note is the offer for sale component. While this is common in IPOs, it essentially means that proceeds from that portion of the share sale go to the selling promoters rather than the company’s balance sheet. Furthermore, while grey market sentiment—which suggests a potential listing gain—is currently being tracked by traders, these figures are unofficial and highly volatile. They do not accurately predict how the stock will actually trade on the listing day.
The bidding window for the Deepa Jewellers IPO remains open until September 3. Following the close of the issue, the company is expected to finalize share allotment and debut on the stock exchanges, the BSE and NSE, on September 8.