P N Gadgil Jewellers Limited IPO: Check IPO Date, Lot Size, Price & Details

About the company:

P N Gadgil Jewellers Ltd. (PNGJL) is the second-largest organized jewellery retailer in Maharashtra as of January 2024, a region with the highest number of BIS-registered outlets in India (Source: Technopak Report). It is also the fastest-growing jewellery brand among India’s major organised players, with significant revenue growth between Fiscal 2022 and 2024. The company reported a compound annual growth rate (CAGR) of 54.63% in revenue from operations during this period. Additionally, it achieved a 39.78% growth in EBITDA, the second-highest among key jewellery players. PNGJL has built a strong brand reputation in Maharashtra, leveraging the rich heritage of the 'PNG' brand. It offers a wide selection of jewellery in gold, silver, platinum, and diamonds, catering to various price ranges and occasions such as weddings, engagements, anniversaries, festivals, and everyday wear. As of July 31, 2024, the company had eight sub-brands for gold jewellery, two for diamond jewellery, and two for platinum jewellery, along with a 'make to order' option for customers looking for custom-designed pieces.

IPO Details:

The objectives of the fresh issue:

The company intends to utilize the net proceeds from the fresh issue towards funding the following objects:

• Funding expenditure towards setting up 12 new stores in Maharashtra
• Repayment of certain borrowings availed by the company, and
• General corporate purposes

Key Strengths and Opportunities:

• The rich heritage of the ‘PNG’ brand has helped P N Gadgil Jewellers establish a strong presence in Maharashtra. By building on this legacy, the company has developed a modern brand that offers a wide variety of designs suited to different occasions. As part of its growth strategy, the company leverages its brand strength to expand into under-served markets, particularly in Tier II and Tier III cities across Maharashtra, addressing the demand-supply gap in these regions while maintaining its leadership in the jewellery market.
• The company offers a diverse product portfolio, including jewellery made from various precious metals, diamonds, and gemstones, at a wide range of price points. This allows the brand to serve customers of all income levels and age groups, positioning it as a one-stop destination for jewellery. To meet changing customer preferences, the company consistently develops new designs, drawing on its extensive experience and market insights. The company works closely with its team of designers to introduce innovative products, ensuring that its offerings stay relevant and appealing to its customer base.
• P N Gadgil Jewellers plans to expand beyond Maharashtra, tapping into regions with unmet demand for jewellery. The company intends to replicate its successful market entry approach, focusing on under-served markets where it can differentiate itself from local competitors. Factors such as population density, rental rates, market potential, and competition are carefully considered when selecting new locations. By establishing showrooms that cater to local preferences and offering a broad range of jewellery options, PNG aims to capture a larger market share and continue its growth trajectory in new territories.

Risks:

• The recognition and reputation of P N Gadgil Jewellers’ flagship brand ‘PNG’ and its sub-brands like ‘Saptam’, ‘Swarajya’, and others play a crucial role in the company’s success. Any damage to the brand’s image, name, or logo could negatively affect its financial performance and operations. Since the company’s growth heavily relies on these brands, maintaining a positive brand image is essential. Any decline in reputation could lead to a loss of customer trust and, in turn, impact the company’s cash flow and overall business performance.
• The jewellery industry is highly competitive, and P N Gadgil Jewellers faces constant pressure to differentiate its products and build strong brand recognition. If the company fails to innovate, effectively market its products, or keep pace with competitors, it may struggle to attract customers. A decline in customer interest or negative public perception could result in reduced store traffic leading to an adverse impact on the company’s business, and future growth potential.
• A significant portion of P N Gadgil Jewellers’ business is concentrated in Maharashtra, particularly in Pune. The company is highly dependent on revenue from its top five stores in the region. Any adverse event affecting these stores or the broader Maharashtra region—such as economic downturns, regulatory changes, or natural disasters—could have a detrimental impact on the company’s overall business prospects, financial condition, and operational results.

Financial Snapshot:

Conclusion:

P N Gadgil Jewellers Limited has demonstrated steady growth in revenue, PAT, and EBITDA. The company is priced at an earnings multiple of 37x, based on its EPS as of March 31, 2024, and the upper price band. Compared to its listed competitors, such as Kalyan Jewellers, Senco Gold, and Thangamayil Jewellery, P N Gadgil appears to be undervalued. Given its strong financial performance and the positive outlook for the industry, we recommend investors to subscribe to P N Gadgil Jewellers Limited IPO.