PCJ is an established jewellery retailer in North India. The company has two
jewellery manufacturing facilities in Uttarakhand that cater to the domestic
market and two facilities at Noida for the exports market. It also export gold
and diamond jewellery on a wholesale basis to distributors in Dubai, Hong
Kong and Singapore. Strong brand recall, successful branch expansion (from
one to 30 showrooms in the past seven years) and stellar increase in gold
prices have added shine to PCJ’s topline which has witnessed a CAGR of
69% over the period FY09-FY12. The Company plans to open 20 retail
showrooms by utilising funds raised through the IPO.
At the upper band of the issue price, PCJ is valued at 9x – H1FY13 Annualized
EPS/share of Rs. 15.82/- at upper end of the price band. With due
consideration to factors like a) established brand, b) network of strategically
located large format showrooms, c) wide product range with increasing
focus on diamond jewellery which would lead to improved margins, d) good
demand for gold jewellery in India despite a significant rise in gold prices,
e) cheaply valued as against listed peers like Gitanjali Gems, Titan Industries
and Tribhovandas Bhimji Zaveri, we believe the stock is priced reasonable.
However, concerns like possible decline in gold prices, higher working
capital requirement, and significant competition from unorganized and
organized players may affect the performance of the company. We
recommend investors to “SUBSCRIBE” the issue as it is a proxy for India’s
consumption story.
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