PN Gadgil zooms 8% as MOFSL initiates coverage with 'Buy', sees 24% upside

PN Gadgil share price: Recently-listed jewellery maker PN Gadgil Jewellers (PN Gadgil) share price was buzzing in trade on Monday, December 9, 2024, as the scrip zoomed up to 7.84 per cent to hit an intraday high of Rs 829.90 per share. 

 

The rise in the PN Gadgil share came after domestic brokerage firm Motilal Oswal initiated coverage with a ‘Buy’ rating for a target price of Rs 950, reflecting an upside of 24 per cent.

 

“We initiate coverage on the stock with a ‘Buy’ rating and a target price (TP) of Rs 950 (based on 35x December’26E P/E). The successful execution of store rollouts, gold hedging policy, and an improvement in operating margin will be the key catalysts for re-rating of the stock,” Motilal Oswal analysts said in a note.

 

 

Analysts at Motilal Oswal noted that P N Gadgil Jewellers, founded in Pune in 1832, ranks as the second-largest jewellery retail chain in Maharashtra, operating over 48 stores, with 12 new additions in FY25 year-to-date. The company reported a revenue of Rs 6,100 crore in FY24, supported by its network of 36 stores, which includes two in Goa and one in the United States.

 

The company boasts a rich legacy and a presence across 21 cities in Maharashtra. In recent years, the company has prioritised improving unit economics, expanding its make-to-order offerings, and refining its product mix. 

 

As the jewellery market continues its shift toward formalisation, analysts believe, P N Gadgil is now focusing on aggressive network expansion. While consolidating its position in Maharashtra, PN Gadgil plans to enter new markets such as Madhya Pradesh, Chhattisgarh, and Bihar. 

 

Analysts project the company will add 44 stores over the next three years, growing its total count to 80 by FY27, up from 36 in FY24. This includes 12 already opened in FY25 and plans for 8 more by year-end.

 

Moreover, PN Gadgil aspires to become the leading jewellery retailer in Maharashtra, challenging Tanishq, which currently leads in store count. The company is also working to improve its product mix, aiming to increase the share of studded jewelry. Over the past three years, the proportion of studded jewellery has risen 250 basis points (bps) to 7 per cent, and PN Gadgil is targeting double digits within the next year.

 

On the valuation front, analysts forecast robust growth for PN Gadgil between FY24 and FY27, estimating revenue, earnings before interest, tax, depreciation and amortisation (Ebitda), and profit after tax (PAT) compound annual growth rate (CAGRs) of 23 per cent, 31 per cent, and 36 per cent, respectively. The growth, they believe, is driven by a 30 per cent store CAGR, a strong presence in a formalising Maharashtra market, a higher proportion of studded jewellery, improved product mix, better sourcing strategies, and debt reduction efforts. These factors, analysts believe, are expected to boost the company’s profit before tax (PBT) margin to 4.6 per cent in FY27, up from 3.4 per cent in FY24.

 

However, potential risks, analysts highlighted, include gold price volatility, as PN Gadgil has not fully hedged its exposure, the performance of newly opened stores, and increasing competition that could pressure margins.

 

PN Gadgil Jewellers IPO

 

PN Gadgil Jewellers made a remarkable debut on the stock exchanges, listing at Rs 834 on the BSE—a premium of 73.75 per cent over its issue price of Rs 480 per share. On the NSE, the stock opened at Rs 830, reflecting a 72.91 per cent premium.

 

The listing surpassed market expectations, as analysts had anticipated a listing gain of approximately 63 per cent. In the unlisted market, the stock was projected to debut at Rs 783.5 per share, including a premium of Rs 303.5 over the IPO price.

 

PN Gadgil Jewellers share price today 

 

Shares of PN Gadgil Jewellers started today’s session at Rs 781.95 per share, against the previous close of Rs 769.50. PN Gadgil Jewellers share has a 52-week range of Rs 843.80 - 611.40. 

 

The market capitalisation of PN Gadgil Jewellers is Rs 10,704.67 crore, according to BSE. 

 

At 2:20 PM, PN Gadgil share was trading 2.51 per cent higher at Rs 788.80 apiece. In comparison, BSE Sensex was trading 0.15 per cent or 123.69 points lower at 81,585.43 levels.