Is P N Gadgil Jewellers IPO Good or Bad - Detailed Review

P N Gadgil Jewellers is kicking off its initial public offering which will be open from September 10, 2024, to September 12, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether P N Gadgil Jewellers IPO is good or bad, whether it is worth investing in this IPO, and so on. 

In this article, we'll provide a comprehensive P N Gadgil Jewellers IPO review, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.

P N Gadgil Jewellers IPO - Company Overview

PNG Jewellers is one of the leading organized jewellery players in Maharashtra, which is the largest market for BIS-registered outlets in India. As of January 2024, it stands as the second-largest jewellery retailer in the state in terms of store count. The "PNG" brand comes from the well-known "P N Gadgil" name, which has a history going back to 1832, giving it over 100 years of heritage. With this long history, PNG Jewellers has built a strong reputation and loyal customer base in Maharashtra.

PNG Jewellers offers an extensive range of precious metal jewellery, including gold, silver, platinum, and diamonds, catering to various price points and designs. Their collections are tailored for special occasions like weddings, engagements, anniversaries, and festivals, as well as everyday wear. 

As of July 2024, the company has grown to 39 stores, located in 21 cities across Maharashtra and Goa, along with one store in the U.S. Together, these stores cover about 108,282 square feet of retail space. Of these stores, 28 are owned by the company, while 11 are operated under a franchisee-owned, company-operated (FOCO) model, which helps maintain consistent product quality and service. 

These stores are a mix of sizes, including 22 large stores (over 2,500 sq. ft.), 13 medium-sized stores (1,000-2,500 sq. ft.), and 4 smaller stores (under 1,000 sq. ft.).

Furthermore, the company has plans to expand its retail network by adding 12 new stores in Maharashtra by FY26, funded through its Net Proceeds. The company also uses a multi-channel approach, offering both in-store shopping and a strong online presence through its website, popular online marketplaces, and the “PNG Jewellers” mobile app, which was launched in March 2022.

P N Gadgil Jewellers IPO - Financial Overview

The following table shows you the key financial details of PNG jewellers for three financial years:

If we take a look at the financials of P N Gadgil Jewellers,  we can see that the company has tripled its revenue, from Rs.2555.63 crores in FY22 to Rs.6110.94 crores in FY24. Similarly,  its profits have also increased from Rs.69.51 crores in FY22 to Rs.154.34 crores in FY24. For FY24, the company was able to retain 2.53% of profits from the total revenue generated.

Furthermore, over the past three years, the company has reduced its working capital days to 51 and Inventory days to 63. This indicates that the company is managing its cash and stock more efficiently and is selling its products faster and turning its assets into cash faster.

For FY24, the ROE and RoCE were reported at 28.88% and 27.31%, respectively. This suggests that the company has given good returns to the shareholder's capital and has efficiently utilized its resources. 

P N Gadgil Jewellers IPO - Industry Overview 

As of FY23, the Indian Jewellery Retail sector was estimated close to USD 70 billion. Within this landscape, organized retail accounted for about 37%, comprising both national and regional players. The rest of the jewellery retail sector continued to be dominated by the unorganized segment, comprising over 500,000 local goldsmiths and jewellers. 

By the end of FY28, the jewellery market is expected to reach USD 145 billion which can be attributed to the expanding economy, increased disposable income, a surge in consumer demand for gold, the upward trajectory of gold prices, and a rising interest in other categories such as diamonds, other precious stones, and costume jewellery.  

Currently, the fine jewellery segment in India comprises 90% of the overall jewellery market. This market can be further broken down into Gold and Non-Gold categories, with Non-Gold encompassing Diamond, Platinum, Silver, Platinum, and other materials. It is estimated that the Non-Gold market is poised to grow at a CAGR of 18.8% from FY23 to FY28, reaching a market valuation of USD 19 billion

P N Gadgil Jewellers IPO - Peer Comparison

The following table gives you a comparison of P N Gadgil Jewellers with its industry peers as of FY24:

Based on the above table we can see that P N Gadgil Jewellers is a mid-sized player in the jewellery industry, with lower revenue compared to bigger brands like Titan and Kalyan Jewellers. 

While its sales and profits are smaller than companies like Kalyan and Senco Gold, P N Gadgil shows strong financial efficiency, with a high ROE (28.88%) and RoCE (27.31%), meaning it uses its funds well to generate profits. However, its profit margins are thinner, with an EBITDA margin of 4.54% and a PAT margin of 2.53%, lower than its peers who have margins between 3-8%. 

On the positive side, P N Gadgil stands out for its excellent management of working capital and inventory, with 51 working capital days and 63 inventory days, much better than Kalyan and Senco. This means P N Gadgil is quicker at selling its products and turning its resources into cash, showing strong operational efficiency despite its smaller size.

P N Gadgil Jewellers IPO Details

P N Gadgil Jewellers IPO Date

P N Gadgil Jewellers IPO is open to subscription from September 10, 2024, to September 12, 2024. The shares will be allocated to investors on September 13, 2024, and the company will be listed in the NSE and BSE on September 17, 2024

P N Gadgil Jewellers IPO Issue Price

P N Gadgil Jewellers is offering its shares in the price band of Rs.456 to Rs.480 apiece. This means you would require an investment of Rs.14,880 per lot (31 shares) if you are bidding for the IPO at the upper price band.

P N Gadgil Jewellers IPO Size

The company is offering a total of 22,916,667 shares, amounting to Rs.1,100 Crores. Out of these, 17,708,334 shares worth Rs.850 Crores are offered through a fresh issue, and 5,208,333 shares worth Rs.250 Crores are offered through an offer for sale.

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Is P N Gadgil Jewellers IPO a Good or Bad Investment? Final Thoughts

P N Gadgil Jewellers IPO Review: This IPO could be a good choice for investors looking to invest in a growing mid-sized jewellery company with good operational efficiency. However, it's important to keep in mind that the company has lower profit margins and is smaller compared to bigger brands like Titan and Kalyan. Like any investment, you should consider both the company's strengths and risks, as well as your own investment goals and risk tolerance, before deciding whether to invest.

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