PN Gadgil Jewellers shares gain after strong December quarter business update

Over the past 1 month, the jewellery retailer stock has declined over 12 percent

Shares of PN Gadgil Jewellers gained over 2.5 percent to Rs 690 apiece on January 9 following the company’s strong business update for the December quarter (Q3FY25).

Over the past 1 month, the jewellery retailer stock has declined over 12 percent, as against 3 percent drop in the Nifty 50 index. Earlier, the stock hit 52-week low of Rs 611 apiece on November 22, 2024.

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The jewellery retailer reported a 24 percent year-on-year (YoY) revenue growth for Q3FY25, driven by impressive same-store sales growth and festive demand during Dussehra, Diwali, and the wedding season.

The retail segment led the growth with a 42 percent YoY revenue increase, while the franchise segment saw a remarkable 87 percent YoY rise. The e-commerce segment also outperformed, with a 98 percent YoY surge in revenue. Additionally, the diamond category experienced robust growth, achieving a 40 percent YoY revenue increase.

The company also shared its progress on store expansion, having opened nine new outlets as part of its plan to launch 12 stores. These stores were rolled out over nine consecutive days during Navratri in October last year. PN Gadgil announced plans to open three more stores in the upcoming quarter, further expanding its footprint.

For the third quarter of FY25, the company reported a consolidated YoY revenue growth of around 24 percent, compared to the same period in FY24.

Motilal Oswal analysts recently initiated coverage on PN Gadgil Jewellers with a "buy" rating and a target price of Rs 950 per share. They highlighted the company's successful store rollout strategy, gold hedging policy, and improving operating margins as key drivers for a potential re-rating of the stock.

As the jewellery market shifts toward formalisation, analysts believe PN Gadgil is strategically focusing on aggressive network expansion. While consolidating its position in Maharashtra, the company is also targeting new markets such as Madhya Pradesh, Chhattisgarh, and Bihar.

In terms of valuation, analysts forecast strong growth for PN Gadgil from FY24 to FY27, with estimated compound annual growth rates (CAGRs) of 23 percent for revenue, 31 percent for EBITDA, and 36 percent for profit after tax.