PC Jeweller plans 20 new stores by FY14 from IPO proceeds
Delhi-based jewellery manufacturer and retailer PC Jeweller's initial public offer to raise up to Rs 609 crore will open on Dec 10 and close on Dec 12. The company has priced the 4.51 crore equity share issue in Rs 125-135 range and it plans to use the proceeds to expand its retail footprint across India.
December 10, 2012 / 09:41 IST
Nachiket Kelkar
moneycontrol.com
Delhi-based jewellery manufacturer and retailer PC Jeweller's initial public offer to raise up to Rs 609 crore will open on Dec 10 and close on Dec 12. The company has priced the 4.51 crore equity share issue in Rs 125-135 range and it plans to use the proceeds to expand its retail footprint across India.PC Jeweller's first showroom opened in Delhi in 2005 and now has 30 outlets across 23 cities, Balrram Garg, MD said on Tuesday. It has opened 6 showrooms so far this year and plans to open 20 more outlets by FY14, he added.PCJ will focus on wedding and diamond jewellery (it has higher margins) to drive sales. It will only open large format stores on the high streets, Garg said. Apart from retailing, PC Jeweller also exports jewellery to distributors in Dubai and Hong Kong on a wholesale basis. Last fiscal, exports accounted for 33 percent of its total revenue. But, Garg said there is huge potential for growth in India itself, so exports will not be a big focus area in the near future.Organised jewellery retailing accounts for less than 10 percent of total jewellery market in India. PC Jeweller competes with other national chains like Tanishq owned by Titan Industries (136 stores) and Tribhovandas Bhimji Zaveri (15 showrooms) among others. For the first six months of the current financial year, PC Jeweller reported a net profit of Rs 141 crore, on revenue of Rs 1,855 crore. Its FY12 net profit rose 60 percent to Rs 231 crore, while revenue rose 54 percent to Rs 3,041 crore.In comparision, TBZ's net profit for the last financial year rose 46 percent to Rs 57 crore, while net sales were up 16 percent to Rs 1,385 crore. The Mumbai-based company had raised Rs 200 crore in an IPO priced in the Rs 120-126 range earlier this year.Titan's jewellery division profit before tax was at Rs 698 crore, on revenue of Rs 7,064 crore.There are several factors that can impact earnings of jewellery retailers, including PCJ. For instance, changes in prices of gold, diamond and other precious metals. PCJ procures its gold required for its manufacturing operations under the gold loan schemes from canalising agencies and international bullion suppliers. Under such an arrangement, the price of gold purchased is not fixed on procurement but rather within the applicable credit period on the basis of prevailing gold rates on sale to customers.The general economic conditions in India and its export markets, changes in consumer preferences could also affect its operations, the company says.However, more important in PCJ's case would be the rising tax rate. Its tax rate has increased from 13.4 percent in FY12 to 20.4 percent for the first half of this year. The company's manufacturing units in Noida special economic zone currently enjoy tax incentives. But as these incentives will diminish over the years, the tax rate will increase further, say company officials.Crisil has assigned IPO grade of three on five for PCJ IPO. This grade indicates that the fundamentals of the IPO are average relative to the other listed equity securities in India. The proposed IPO shall constitute 25.20 percent of the post issue paid-up equity share capital. 50% of the net issue will be allocated on a proportionate basis to qualified institutional buyers. The company may allocate up to 30% of the QIB portion to anchor investors, on a discretionary basis, out of which at least one-third shall be reserved for domestic mutual funds, subject to valid bids being received from domestic mutual funds at or above the anchor investor issue price.nachiket.kelkar@network18online.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
