PC Jeweller Ltd. - Subscribe - Ajcon Global

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.

Source : Equity Bulls

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