PC Jewellery - Subscribe for listing gains as well as for the long term - Msearch IPO flash

Recommendation: Subscribe for Long term!!!

A brief on the company:

PC Jeweller (PCJ) is leading Delhi-based organised player, promoted by brothers Mr Padam Chand Gupta and Mr Balram Garg. It has retails gold jewellery (66% of FY12 revenue from operations) and diamond-studded jewellery (32%) under the ?PC Jeweller? brand. It has 30 showrooms across 23 cities in North and Central India totaling 164,572 sq ft as on Sept 2012. The domestic market accounted for 67% of FY12 revenue. Its manufacturing units for gold and diamond-studded jewellery are located in North India. It intends to add 20 new showrooms by FY14 using the proceeds from the planned IPO.

Investment Rationale:

- Strong brand recall in Northern states.

- Factors effecting raise in organise gold Jewellery sales are

* Higher disposable income.
* Increasing customer awareness about hallmarking (quality assurance). The recent approval on mandatory hallmarking will also accelerate the pace.
* Assured buy-back scheme by organised players (since jewellery is seen as an investment).
* Aggressive branding by organised players.
* Retail distribution allowing customers across locations to enjoy similar experiences leading to greater convenience.

- Gold demand long-term story intact.

- Organised Branded jewellery to perform better.

MView: Considering the above rationale, we expect there is a huge growth opportunity for investors to park there money into a leading Gold Jewellery player. As per the IPO proceeds said money raised would be utilised to ramp up new stores in high streets which inturn supports the growth plans. We foresee that the strong brand and growth in organised gold jewellery market would be the key success factor for PCJ going ahead. On valuation parse we see that the IPO is prices very attractive as it is quoted 6.3x FY13E annualized earnings which is cheaper when compared to listed Gold Jewellery players which are trading in the range of 15-25x price earnings in the market, hence keeping the scope of growth same to all the Gold retail players, we advice inventors to subscribe to PCJ IPO for listing gains as well as the long term.

Source : Equity Bulls

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