Business: The company sells jewellery under its flagship brand ‘PNG’. At the end of July 2024, PNG operated 39 stores, with a total area of approximately 108,000 sq ft. Of these, 28 are company-owned and 11 are franchisee-owned. The manufacturing of its jewellery is carried out by more than 75 skilled craftsmen. The stores in Pune contributed 65% of the company’s FY24 revenues, while only 1.8% came from online marketplaces. As a traditional player, the company runs customer-oriented incentives and loyalty schemes.
Financials & Growth Prospects: The company’s revenues have grown at a compounded annual growth rate (CAGR) of 55% over the last three fiscal years to ₹6,110 crore. Its net profit has grown by 49% during this period to ₹154 crore in FY24. The operating margin (Ebitda margin) for FY24 stood at 4.5% with return on capital employed (RoCE) at 27%. The company is using the issue proceeds to fund the establishment of 12 new stores in Maharashtra and towards repayment of borrowings. India is the second largest consumer of gold jewellery. The Indian jewellery retail market is expected to grow at 16% CAGR over FY23-28 with the rising share of organised players, according to disclosures made in the company’s red herring prospectus.
Valuations: At an implied market capitalisation of around ₹6,513 crore, the IPO values the company at 42.2 times its annualised earnings for FY24. These valuations are comparable to those commanded by other regional family-owned jewellery firms of similar size such as Senco Gold from West Bengal and Thangamayil Jewellery in Tamil Nadu. The Senco Gold stock trades at a price-to-earnings ratio of 43.2 and has tripled since its listing in July last year. Besides, the rise in gold prices over the past year has pushed up the retail demand for gold. Long-term investors interested in partaking in the growth of a regional jewellery retail chain may consider investing in the issue.
RAISES ₹330 CR FROM ANCHORSPN Gadgil Jewellers on Monday raised ₹330 crore by allotting 6.8 million shares to 33 anchor investors at ₹480 apiece. HDFC MF, Axis MF, Mirae Asset Great Consumer Fund, Tata MF, Motilal Oswal MF, Nippon India MF, Bandhan MF, Edelweiss MF, Citigroup Global Markets, Societe Generale and Goldman Sachs (Singapore) were among the anchor investors.
