Nityas Gems IPO: Lab-Grown Jewellery's Rapid Growth and the Working Capital Test

1. IPO Overview

Nityas Gems and Jewellery is raising about Rs 108.42 crore at the top of its Rs 70-75 band through a 100% fresh issue to fund working capital. There is no offer for sale, so no existing shareholder is selling and all proceeds go to the company.

2. What the company does

Makes lightweight lab-grown diamond jewellery in Surat

Nityas designs and makes gold jewellery studded with lab-grown diamonds. A lab-grown diamond is grown in a laboratory to replicate how diamonds form underground, and is chemically and visually the same as a mined diamond for most buyers.

It buys gold bullion and lab-grown diamonds upfront, then designs, casts, sets stones, polishes and quality-checks finished pieces at its own factory. The plant is on three floors of Ratih House on Varachha Road, Surat, spread over about 7,000 sq. ft. of leased space.

The focus is deliberately on lightweight, affordable 14-karat and 18-karat pieces for daily wear, fashion and self-purchase. The catalogue spans rings, earrings, pendants, bracelets, mangalsutras, nose pins, necklaces, cufflinks and bangles. The design library stood at over 32,000 designs as of August 31, 2026, up from about 3,000 in Fiscal 2023, supported by 29 in-house designers and 122 in-house craftsmen out of 192 permanent staff.

Retail chains and small jewellers place most orders

Almost all sales are business-to-business. Nityas supplies finished jewellery to organised retail chains, standalone retailers and wholesalers, who then sell to end consumers. Named chain customers include GIVA, Palmonas, ONYA and Ladia Diamonds.

Sales are order-driven. A retailer picks a design or asks for a customised version by purity, weight and finish, Nityas fixes the price order-by-order with reference to prevailing gold and diamond prices, makes and dispatches, then collects over an agreed credit period. There are typically no long-term supply contracts, so repeat orders depend on design relevance, quality, price and on-time delivery.

The customer base has broadened fast, which has cut concentration even as sales to large buyers grew in rupees.

Runs ten Ayaani stores that sell directly to shoppers

Since July 2025 Nityas also sells directly to consumers through its subsidiary Ayaani Diamonds and Jewellery Private Limited, in which it bought 50.04% for Rs 24.11 crore. Ayaani had been its largest wholesale customer before the deal.

Ayaani sells under the brand AYAANI through an online store and ten physical stores across eight cities — Ahmedabad, Surat, Mathura, Delhi, Chandigarh, Jodhpur, Udaipur and Raipur — of which seven are company-run and three are franchise-run on leased premises. Shoppers either buy from the catalogue or order customised pieces, often researching online and buying in store. Ayaani offers exchange up to 85% of prevailing diamond value and a buyback at a specified percentage, though there have been no material claims so far.

D2C is still tiny and only part-year in Fiscal 2026, so it has not yet moved group profit.

B2B still brings almost all revenue

The mix has swung toward standalone retailers, who were about 43% of Fiscal 2026 sales. D2C was about 4% in its first part-year, split as Rs 7.02 crore online and Rs 1.79 crore in stores.

Sells mostly at home, in five states

Domestic sales were about 97% in Fiscal 2026. Five states — Gujarat, Karnataka, Maharashtra, Telangana and Tamil Nadu — together contributed about 85% that year, down from about 94% two years earlier as Karnataka and Maharashtra grew. Overseas sales to the UAE, Australia, Canada, Taiwan and Kenya remain order-based and small.

Sales peak in festivals and weddings. In Fiscal 2026 about 56% came in the second half, with the January-March quarter the strongest at about 35%.

Factory runs less than half full while volumes double

Utilisation has more than doubled but is still under half, because production follows orders. That leaves room to grow without a new plant, but also means fixed costs are spread over a small base when orders pause.

Buying is concentrated and paid for early. Gold plus lab-grown diamonds were close to 90% of standalone raw-material purchases in each year, and the top supplier alone was about 55% of purchases in Fiscal 2026. Fine gold generally needs upfront payment, while customers get credit, which is why stock and receivables drive cash needs.

3. Use of Funds

• Funding working capital requirements: Rs 70.00 crore
• General corporate purposes: balance of net proceeds, capped at 25% of gross proceeds

There is no offer for sale, so no proceeds go to selling shareholders.

4. Financials Overview

All figures are on a restated consolidated basis for the year ended March 31. Sales almost quadrupled in two years, profit grew faster, and leverage fell as equity expanded. The deep dive is next; this table is the anchor for it.

5. What the financials tell us

Sales, profit and cash tell three different stories. Sales almost quadrupled on many more wholesale orders, bigger volumes lifted margins, but cash never came back because gold and diamonds must be paid upfront while retailers pay later. The group is broader than before yet still depends on a few buyers, one big supplier and a few states, and buying half of its biggest customer adds shops and stock without yet adding much sales.

Sales almost quadrupled, almost all of it wholesale

Revenue rose from about Rs 53.70 crore in Fiscal 2024 to about Rs 202.90 crore in Fiscal 2026. In Fiscal 2026 B2B was about Rs 193.90 crore, or about 96 in every 100 rupees of sales, while own-channel sales were only about Rs 8.80 crore.

• Own-channel sales appear only from July 2025, when Ayaani was consolidated, so Fiscal 2026 includes only part-year shop sales and earlier years have none.
• Wholesale growth came with many more buyers, from 74 to 323 in two years, and the top-10 share fell from about 84% to about 55%.

That means growth is not a one-customer spike, but it is still wholesale orders without long-term contracts, and last year is not directly comparable because of the part-year retail addition.

Profit grew faster than sales because volume spread fixed costs

Operating profit rose from about Rs 5.50 crore to about Rs 31 crore, and profit for the period from about Rs 4 crore to about Rs 22.30 crore, while sales grew about 278%. Margins widened from about 10% to about 15% on EBITDA and from about 8% to about 11% on PAT.

The cause given is scale and cost absorption: sales grew faster than costs. Gold plus diamonds stayed close to 90% of purchases, and wages, staff, advertising and other overheads all rose in rupees, including materials consumed of about Rs 167.50 crore in Fiscal 2026. For an investor that is operating leverage — more volume over the same design team, factory and overheads — but it still depends on passing gold and diamond prices through on each order and keeping volume high enough to absorb fixed costs.

No split of price versus volume versus mix is given, so it is unclear how much margin would survive a fall in volume or a squeeze on pass-through.

Profitable growth still burns cash, and the IPO covers only part of next year

The business earned a cash profit before working changes of about Rs 32 crore in Fiscal 2026, up from about Rs 5.50 crore two years earlier. But building jewellery stock and giving credit to retailers used more cash than it earned in all three years.

• Operating cash was about Rs -1.10 crore, then about Rs -10.10 crore, then about Rs -14.70 crore as sales scaled.
• Money tied in day-to-day trading on a standalone basis rose from about Rs 6.80 crore to about Rs 44.90 crore, with inventories from about Rs 5.10 crore to about Rs 41.10 crore.
• Net working capital days (consolidated) lengthened from 47 to 135 days, inventory days from 31 to 81 days.

The shortfall was paid for with new shares and borrowings, with financing inflows of about Rs 16.90 crore in Fiscal 2026. For Fiscal 2027 the standalone need is estimated at about Rs 110.30 crore, to be met by Rs 70.00 crore from the issue plus about Rs 40.30 crore from internal accruals and equity, with no bank short-term money assumed.

On paper the two add up, but the issue covers only about two-thirds. If stock days or customer payment times slip, or the assumed internal share does not arrive alongside the Rs 70 crore, more funding will be needed.

Still depends on a few buyers, one supplier and a few states

Breadth improved but dependence stays high.

• Top 10 customers were about Rs 112.60 crore, or about 55% of revenue in Fiscal 2026, down from about 84% two years earlier, so more than half still goes to ten buyers.
• The top supplier alone was about Rs 99 crore, or about 55% of purchases, and the top ten were about 86%.
• Five states were about Rs 172.50 crore, or about 85% of revenue, and domestic sales were about 97%.

Sales and buying are largely order-driven without long-term contracts. Losing a large buyer, a disruption from the dominant supplier, or a slowdown in a core state can still move sales and costs a lot because there is no locked-in cushion.

Buying half its biggest customer added shops, goodwill and returns

The parent bought 50.04% of Ayaani in July 2025 for Rs 24.11 crore. That added about Rs 7.90 crore of goodwill — the premium over net assets that must be supported by future shop results — and left outside owners with about Rs 17 crore of group equity, or about a fifth of total equity.

• Ayaani had been the top customer in Fiscal 2025, so past sales to it are now inside the group.
• The Surat factory can make 360 kg a year but made about 163 kg, or about 45% full, up from about 20%, so there is headroom without new plant.
• The group now runs ten stores plus online, which bring stock and leases onto the balance sheet. Total profit was about Rs 22.30 crore but about Rs 22.80 crore belonged to owners because outside owners took a small loss, so there is no leak yet but future shop profits will be shared.
• Standalone B2B Returned goods rose from about Rs 3.20 crore, or about 6% of gross sales, to about Rs 24.70 crore, or about 12%, linked to bigger scale and dealer stock rotation rather than faults, but it ties up cash.

Related dealings were about 33% of revenue in Fiscal 2026, including sales to its own subsidiaries that are removed on consolidation. With no store-level profit disclosed, it is not yet possible to judge whether the ten stores and higher returns will pay off.

6. Valuation Analysis

At the top of the band, Rs 75 a share, the IPO values the company at about 19 times its Fiscal 2026 owner profit on post-issue shares — the right lens for a profitable operating company. That sits near the peer median of about 19 times, a small premium to the closest-scale peer. The pricing looks balanced rather than cheap: growth and mid-teens margins argue against a deep discount, while never-positive operating cash, lengthening stock days and concentrated order-based sales argue against a premium. The price looks fair only if stock and collections stop lengthening and shop results support goodwill.

7. Peer Analysis

Basis: peers at closing price on September 10, 2026 divided by FY26 basic EPS on consolidated basis; subject at Rs 75 on post-issue shares and FY26 owner profit.

Nityas really compares with Golkunda on size, not with the two large exporters. Goldiam and Renaissance are four to fourteen times its sales, export-led and US-centric, while Nityas is almost entirely domestic and wholesale.

Three differences matter. First, Nityas grew about 278% over two years off a tiny base by adding customers, while peers grew 22-62% on established bases — so its growth premium rests on repeat orders that are not locked in. Second, its mid-teens EBITDA margin beats Golkunda and Renaissance but trails Goldiam by ten points, and its high return on equity has fallen each year as equity expanded. Third, its cash profile is weaker: working days lengthened to 135 while Golkunda held around 112, it pays suppliers in about 10 days versus 21-36 days for peers, and operating cash stayed negative every year.

At parity to the median the price is not cheap once cash is considered. Avoiding a deep discount is fair for growth and returns, but the premium to Golkunda is not yet earned without proof of cash conversion and retail execution.

8. Moat

What genuinely sets it apart, and what is table stakes

The edge is operational, not structural.

• Integrated making plus selling helps responsiveness. Doing design, manufacturing and distribution in-house, and now running Ayaani retail, lets feedback from shops feed wholesale designs faster than a pure job-worker or trader could.
• A large, fast-refreshed library is hard to build quickly. Over 32,000 designs backed by 29 designers and CAD/CAM prototyping, plus 122 in-house craftsmen, take order flow and time to replicate.
• Focus on lightweight affordable pieces fits younger buyers who want daily wear at accessible prices.

But single-site production, under-half utilisation and dependence on few customers and suppliers make it replicable and fragile against larger peers with diversified plants and export books. Design breadth alone does not lock in buyers who keep multiple vendors.

Tailwinds that expand the pie

• Indian lab-grown diamond jewellery is projected to grow about 16% a year to about Rs 7,189 crore by 2030, which supports higher wholesale volumes and sell-through.
• Lab-grown stones cost 60-80% less than natural stones of similar specs, widening the buyer base and letting retailers earn healthier margins on accessible luxury.
• Millennial and Gen-Z preference for value, transparency and sustainability drives adoption of exactly the daily-wear designs Nityas focuses on.
• The cut in basic customs duty on cut and polished diamonds to 2.5% in the 2026-27 Budget lowers input costs and supports margins.

How durable the edge is

There is no lasting moat yet. Advantages are in execution — design speed, quality consistency and turnaround — which rivals can match if they invest in designers and craftsmen. Durability will come only if broader distribution, faster cash collection and a profitable retail arm turn scale into repeat orders and funded growth. Until then a design miss, loss of a key account or supply hitch can wear the edge down quickly.

9. Risks

• Customer and order risk (company-specific, improving but still high). Top ten buyers still take over half of sales with no long-term contracts. The base widened to 323 customers, but loss or pause by one or two large chains would leave fixed factory costs uncovered.
• Cash and funding risk (company-specific, worsening with scale). Upfront gold buying against retailer credit keeps operating cash negative and lengthens working days. The Rs 70 crore covers only part of next year's need, so any slip in stock or collections forces more debt.
• Supplier and input risk (company-specific and industry-wide). One supplier is over half of purchases, gold is over 70% of material buys, and prices are volatile with limited pass-through lags and no comprehensive hedge.
• Concentration and single-site risk (company-specific). Five states drive most sales with minimal export buffer, and all output comes from one leased Surat plant. Any shutdown, lease issue or regional slowdown hits disproportionately, while low utilisation pressures margins in soft quarters.
• New retail and governance overhangs (company-specific). Ten new stores bring leases, stock and buyback promises plus goodwill that needs impairment testing; returns are already about 12% of gross sales. Add related dealings at about a third of sales, a Rs 2.88 crore tax dispute, promoter guarantees and leased promoter property, and an FIR over alleged stock misappropriation at the Jodhpur store — none yet material, but all bear watching.

10. Verdict

The call rests on four load-bearing facts: sales growth is real and broader but still wholesale and order-based; margins show operating leverage yet depend on gold pass-through; profit has never converted to cash and the IPO funds only part of next year's stock and credit need; and a fifth of equity now belongs to outside owners of a still-loss-making retail arm. Together they justify paying near peers, not above them. The thesis works only if working days shorten and operating cash moves toward profit while the store base turns profitable; it breaks if inventory or receivables keep growing faster than sales and force fresh funding.