Deepa Jewellers eyes 46% earnings CAGR on capacity expansion

has raised Rs 250 crore through a fresh issue in its initial public offering to fund inventory needs. The stock currently trades at Rs 194, corresponding to a Nifty level of 23,063. The company is scaling up operations by adding two new product categories, paper casting and nakshi Kundan jewellery, along with 22 new stock keeping units. It is expanding its design team from 15 to 20 members and establishing a 6,700 square foot in-house manufacturing plant in Hyderabad. This move reduces reliance on third-party karigars, providing better cost management, faster order fulfillment, and stricter quality oversight. To strengthen market reach, a new sales office was set up in Vijayawada in November 2025, with another planned for Bengaluru this fiscal year. While headline market attention often focuses solely on gold price volatility, the strategic shift toward in-house manufacturing and organized business models is the primary driver of value here. Organized B2B suppliers account for only 20% to 25% of the overall market, offering substantial room to gain market share as retail chains outsource manufacturing. The IPO proceeds have lowered the company's debt-to-equity ratio from 0.47x to 0.23x. With expected net profits of about Rs 400 crore over the next two years, internal accruals and balance sheet flexibility support business expansion. At current levels, the stock trades at 8 times FY2028 projected earnings. This reflects a 28% to 37% discount to peers such as Shanti Gold International and Shringar House of Mangalsutra, and a 60% discount to Sky Gold & Diamonds. Earnings are projected to grow at a 46% CAGR over FY26-28, presenting an attractive tactical entry opportunity. Key factors to track include the speed of capacity utilization at the Hyderabad facility and wallet share growth among existing retail chain clients, which currently contribute nearly three-fourths of revenue. The stock presents an attractive tactical buy at current valuation levels.