Subscribe to PC Jeweller IPO, says Anand Rathi
Anand Rathi Retail Research has come out with its report on PC Jeweller IPO. According to the research firm, the company has been showing good traction in the performance, looking at its expansion track record and future plans shows good potential in the company.
December 11, 2012 / 14:02 IST
Anand Rathi Retail Research has come out with its report on PC Jeweller IPO. According to the research firm, the company has been showing good traction in the performance, looking at its expansion track record and future plans shows good potential in the company. Comparing to its peers it looks fairly placed in terms of size, brand recognition and showroom counts. One can
It is one of the leading jewellery companies in India and their operations include the manufacture, retail and export of jewellery. They have a strong brand name in North and central India. They offer wide range of products including gold and diamond jewellery and other jewellery including silver articles with a focus on diamond jewellery and wedding jewellery. For Sep 2012 the domestic gold jewellery, diamond jewellery and other jewellery contributed 67.1%, 32.6% and 0.3% respectively of the revenue from domestic sales.As on Sep 2012 they have 30 showrooms under the “PC jeweler” brand and located across 23 cities in North and Central India with an aggregate area of 1,64,572 sq ft., of these showrooms, 27 are large format (with an area of 3,000 sq ft. or more) including 11 showrooms which have an area of more than 5,000 sq ft. and of which 4 are more than 10,000 sq ft.They have 2 manufacturing facilities in Selaqui, Dehradun, Uttarakhand that cater to the sales in India, they also have 2 facilities at Noida SEZ, Uttar Pradesh that cater to the export sales.Also Read: CARE IPO oversubscribed 2 times on Day 2Business HighlightsFurther expand the retail network
They intend to open an additional 20 showrooms by fiscal 2014 across India including Southern region and western parts of India. This will take the count of showrooms to 50 by FY14 if the expansions are on track.Export comprises of good share of revenue
For Sep 2012 end export consists of 32.6% of the total revenue. They also export gold and diamond jewellery on a wholesale basis to international distributors in Dubai and Hong Kong.Network of strategically large format showrooms
With 30 showrooms across 23 cities in North and Central India with an aggregate area of 1,64,572 sq ft., major showrooms are in the area of Karol Bagh and South Extension in New Delhi and Gurgaon and Panchkula in Haryana. These are typically in the high street areas, which give higher visibility and customer traffic.Continue to increase focus on diamond and the higher margin jewellery sales
They continue to increase their focus on diamond jewellery and other precious stone jewellery, as these typically involve higher profit margins than other types of jewellery. Domestic diamond jewellery sales constituted of 32.6% for Sep 2012 and 21.9% of the total revenue operations in the same period.Strong Financials
The financials for the company show consistent improvement in the business with increasing profitability levels including EBITDA and PAT margins and comfortable ROCE, RONW, gearing and interest coverage ratios.Recommendation
The company has been showing good traction in the performance, looking at its expansion track record and future plans shows good potential in the company. Comparing to its peers it looks fairly placed in terms of size, brand recognition and showroom counts. At higher price band the stock trades at 7.8x its FY12 earnings and with good return ratios over a period of time we feel that investors can SUBSCRIBE to the issue.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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