The IPO of PN Gadgil Jewellers, a well-known jewellery retailer in India, has attracted investor attention, with both retail and non-institutional investors showing significant interest. The IPO opened for subscription on September 10 and is scheduled to close on September 12, 2024. In this article, we provide detailed information on the key aspects of the IPO, subscription status, grey market premium (GMP) and whether it is worth investing.
PN Gadgil Jewellers IPO
An Overview of PN Gadgil Jewellers
PN Gadgil Jewellers is a major player in India’s organised jewellery market, especially in Maharashtra and Goa. The company has a strong reputation built on decades of trust and quality. As of July 2024, it operates 39 stores across 21 cities in India and one store in the U.S. Known for its wide collection of gold, silver, diamond and platinum jewellery, PN Gadgil has established itself as a trusted brand, attracting a wide customer base. The company plans to expand further, with plans to open 12 new stores by FY2026, marking its ambitious growth trajectory.
Key details of PN Gadgil Jewellers IPO
The PN Gadgil Jewellers IPO is set to raise ₹1,100 crore, of which ₹850 crore will come from a fresh issue and the rest from an offer for sale (OFS). The price band for the IPO is between ₹456 and ₹480 per share, and the minimum investment for 31 shares at the upper price band is ₹14,880.
Important Dates:
IPO opening date: September 10, 2024
IPO closing date: September 12, 2024
Allotment last date: September 13, 2024
Listing date: September 17, 2024
This timeline ensures that investors will know their allotment status within a day of the IPO closing, and listing on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will take place soon.
IPO Subscription Status (3rd Day Update)
On the last day of subscription (September 12, 2024) till noon, the PN Gadgil Jewellers IPO witnessed strong demand. The total subscription was 14.13 times the shares offered, with retail investors showing significant interest and subscribing 12.30 times more than the allotted portion. Non-institutional investors oversubscribed their portion by a whopping 36.09 times, reflecting widespread confidence in the company’s potential.
This high level of subscription is a clear indicator of strong market interest in the company, both in terms of its retail business model and its financial performance.
Grey Market Premium (GMP) and Price Band Analysis
As of September 12, 2024, the grey market premium (GMP) for PN Gadgil Jewellers shares was ₹268. This means that the potential listing price is ₹748, which is about 56% higher than the upper price band of ₹480 per share. Such a high GMP is often considered a positive indicator for the listing performance of an IPO.
Given the company’s strong market position, ambitious growth plans, and healthy financial performance, a price band of ₹456 to ₹480 per share is considered attractive by experts. Investors view the IPO as an opportunity to invest in the Indian jewellery sector, especially during the festive and wedding seasons when demand for gold is high.
Use of IPO Proceeds
PN Gadgil Jewellers plans to use the net proceeds from the new issue to expand its retail network and reduce debt. Specifically, the funds will be allocated as follows:
Expansion: A significant portion will go towards setting up 12 new stores in Maharashtra by FY26, thereby expanding the company’s presence in its domestic market.
Debt Repayment: A portion of the proceeds will be used to repay existing debts, thereby improving the company’s financial health.
General Corporate Purposes: The remaining amount will be used for various corporate needs, including working capital and further strengthening the foundation of the business.
This focused use of funds shows that the company is not only aiming for growth, but is also trying to streamline its operations and balance sheet.
Financial Performance of PN Gadgil Jewellers
Over the last three financial years, PN Gadgil Jewellers has demonstrated solid financial growth. From FY22 to FY24, the company saw consistent growth in both revenue and profit. The company recorded a compound annual growth rate (CAGR) of 15% in revenue due to strong demand for its gold and diamond jewellery collection.
Additionally, the company’s EBITDA margin remains healthy, indicating operational efficiency. As of FY24, the company had a net debt of ₹3,965 million, and a portion of the IPO proceeds will be spent on reducing this debt burden.
Key financial metrics:
Revenue growth: 15% CAGR (FY22-FY24)
EBITDA growth: 12% YoY (FY24)
Net debt: ₹3,965 million
These numbers highlight PN Gadgil’s strong financial position, making it a potentially profitable investment for long-term investors.
Valuation and Investor Interest
At the upper price band of ₹480, the market capitalisation of PN Gadgil Jewellers is estimated to be around ₹6,513 crore. The company in the IPO has been valued at a price-to-earnings (PE) ratio of 42.2 times for FY24, which, while relatively high, is reasonable given its growth potential and strong financial position.
Retail and non-institutional investors have shown considerable interest in the IPO, with retail investors oversubscribing 12.30 times and non-institutional investors oversubscribed 36.09 times. This widespread interest highlights the confidence in PN Gadgil’s business model and future prospects.
Expert recommendations on PN Gadgil Jewellers IPO
Several brokerage firms have issued positive recommendations for the PN Gadgil Jewellers IPO. For instance, Swastika Investmart has advised investors to subscribe to the IPO, citing the company’s strong market presence, robust financial performance and high demand for gold during the festive and wedding season.
Anand Rathi too has issued a ‘long-term subscription’ recommendation given the company’s solid profit growth and stable returns. He believes PN Gadgil is well-positioned to gain further market share through its planned expansion.
Risks and Challenges
While the IPO has attracted significant interest, potential investors should be aware of the risks involved. These include:
Gold price fluctuations: The company’s fortunes are linked to gold price fluctuations, which could impact margins.
Competition: PN Gadgil faces stiff competition from both organised and unorganised players in the jewellery sector.
Economic slowdown: Any economic slowdown could reduce consumer spending on luxury items such as jewellery.
Despite these risks, the overall outlook for PN Gadgil Jewellers remains positive.
Conclusion: Should you invest?
The PN Gadgil Jewellers IPO presents an attractive opportunity for both short-term and long-term investors. With strong financials, a robust growth strategy, and positive expert recommendations, the IPO is expected to perform well both during listing and in the long term. However, investors should assess the potential risks and consider their financial goals before making a decision.
For those looking to invest in a trusted brand in the fast-growing Indian jewellery sector, PN Gadgil Jewellers could be a worthy addition to their portfolio.
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