Buy PC Jeweller; target of Rs 490: Emkay

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26 Aug, 2025 12:21

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Healthy 15.5% revenue CAGR, strong earnings CAGR of 25%, good competitive standing, fading regulatory headwinds and better disclosures in the export segment arelikely to drive higher free cash flows and improved return ratios

Domestic business is 72% of sales and the key driver for PCJ. Shift to branded jewellery, fading regulatory headwinds, store expansion and likely revival in urban demand are key catalysts. We expect a 20% CAGR in domestic sales over FY15-18E

Increase in proportion of diamond jewellery in revenue mix and likely uptick in SSG are key levers for margin expansion. We expect EBITDA margins to expand by 121 bps to 12.6% by FY18E

We have valued PCJ on SOTP basis. We have assigned 16x P/E FY17E multiple to domestic business (40% discount to Titan) and 5x P/E to exports business (in line with peers), our target price works out to 490/share. We initiate coverage on PCJ with a BUY rating

"We expect PCJ’s reduced focus on low margin export segment and increased investments & efforts on domestic business to pay off with domestic segment growing at 20% over FY15-18E. Subsequently, we expect strong profitability, higher free cash flow and better return ratios. We have valued PCJ on SOTP basis assigning P/E FY17E multiples of 16x to the domestic business (40% discount to Titan) and 5x to its exports business (in line with peers), our target price works out to 490/share. We initiate coverage on PCJ with a BUY rating", says Emkay Global Financial Services research report.

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