PC Jewellers IPO: Huge growth opportunity to park money
Mehta Equities has come out with its report on PC Jewellers (PCJ) IPO. According to the research firm, there is a huge growth opportunity for investors to park there money into a leading Gold Jewellery player. One can subscribe to the issue, says Mehta Equities.
December 07, 2012 / 17:43 IST
Mehta Equities has come out with its report on PC Jewellers (PCJ) IPO. According to the research firm, there is a huge growth opportunity for investors to park there money into a leading Gold Jewellery player. One can subscribe to the issue, says Mehta Equities.
PCJ is leading Delhi-based organised player, promoted by brothers Mr Padam Chand Gupta and Mr Balram Garg. It has retails gold jewellery (66% of FY12 revenue from operations) and diamond-studded jewellery (32%) under the “PC Jeweller” brand. It has 30 showrooms across 23 cities in North and Central India totaling 164,572 sq ft as on Sept 2012. The domestic market accounted for 67% of FY12 revenue. Its manufacturing units for gold and diamond-studded jewellery are located in North India. It intends to add 20 new showrooms by FY14 using the proceeds from the planned IPO.Also Read: CARE IPO opens on Dec 7: Experts say 'Go for it'Strong brand recall in Northern states: We expect PCJ to replica the same success strategy in upcoming stores is high streets in leading metros. PCJ has been able to create a strong brand recall in the Delhi region. Over the past three years, the company has increased its retail presence in other parts of North and Central India. Its currently operating with 30 showrooms and plans to open 20 by FY14E across India; with showrooms with average size of 6,650 sq ft leading high streets and Tier 1 cities.Gold demand long-term story intact: Demand for gold jewellery which is 65% of India’s overall gold demand has historically been resilient despite a significant increase in gold prices. Organised Branded jewellery to perform better: Historically Jewellery sales remain the stronghold of traditional jewellers and local outlets. However, the share of organised players (defined as retailers with more than one store in similar formats) is expected to increase from the current 8-10%. Multistore players including regional/traditional players such as PCJ, TBZ, Joyalukkas, etc. as well as pan India jewellery players such as Tanishq and the diamond focused Gitanjali, who sell jewellery under various brand names, are set to gain.MView: Considering the above rationale, we expect there is a huge growth opportunity for investors to park there money into a leading Gold Jewellery player. As per the IPO proceeds said money raised would be utilised to ramp up new stores in high streets which inturn supports the growth plans. We foresee that the strong brand and growth in organised gold jewellery market would be the key success factor for PCJ going ahead. On valuation parse we see that the IPO is prices very attractive as it is quoted 6.3x FY13E annualized earnings which is cheaper when compared to listed Gold Jewellery players which are trading in the range of 15-25x price earnings in the market, hence keeping the scope of growth same to all the Gold retail players, we advice inventors to subscribe to PCJ IPO for listing gains as well as the long term.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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