Subscribe to P C Jewellers, says SPA Research
SPA Research has come out with its report on P C Jewellers (PCJ) IPO. The research firm expects, the stock to trade at a premium to Gitanjali Gems and recommend to subscribe to the issue for listing gains as well as for the long term.
December 07, 2012 / 15:17 IST
SPA Research has come out with its report on P C Jewellers (PCJ) IPO. The research firm expects, the stock to trade at a premium to Gitanjali Gems and recommend to subscribe to the issue for listing gains as well as for the long term.
PCJ is one of the leading jewellery companies in India in the organized jewellery retail sector. It has developed "PC Jeweller" as a strong brand in its markets in north and central India as a jewellery retailer with a wide range of jewellery products, particularly diamond jewellery and jewellery for weddings. It has expanded the retail network from one showroom as of April 13, 2005 to 30 showrooms as of September 30, 2012.Also Read: Bharti Infratel IPO opens for subscription on Dec 11Shift towards branded jewellery: It has developed "PC Jeweller" as a strong brand in its markets in north and central India as a jewellery retailer with a wide range of jewellery products, particularly diamond jewellery and jewellery for weddings. Its focus on quality, design range, customer oriented policies and loyalty programs, together with the targeted marketing efforts, have enabled it to develop strong brand recognition and customer loyalty.Exports contributing ~34% to the top-line: In addition to the sale of jewellery through showrooms, it also sells gold and diamond jewellery through online sales on its website. It also export gold and diamond jewellery on a wholesale basis to international distributors in Dubai and Hong Kong. In fiscal 2010, 2011, 2012 and for the six months ended September 30, 2012, the export sales represented 33.5%, 34.4%, 33.0% and 32.6%, respectively, of revenue from operations in these periods.Wide product range with an increasing focus on diamond jewellery: Its wide range of product offerings caters to diverse customer segments, from the value market to high-end customized jewellery. Its product profile includes traditional, contemporary and combination designs across jewellery lines, usages and price points.Key strengths: PCJ's focus on design and innovation, ability to recognize consumer preferences and market trends, the intricacy of designs and the quality and finishing of products are its key strengths. PCJ's approach to a wide range of independent manufacturers from various parts of India allows it to offer a diverse product range.Valuation and outlook: At the upper band of the issue price, PCJ is available at a P/BV of 1.8x and P/E of 8.2x. Although this is in line with valuation commanded by Gitanjali Gems, however, PCJ enjoys higher margin. The company plans to open 20 stores by FY14 (currently 30) which should ensure healthy growth rates over the next 2-3 years. Hence, we expect the stock to trade at a premium to Gitanjali Gems and recommend to SUBSCRIBE to the issue for listing gains as well as for 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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