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Motilal Oswal’s price target implies a potential upside of 24% from Friday’s closing levels. This also means that the stock is likely to double from its IPO price of ₹480 per share. The stock has already risen 72% from its IPO price within three months of its listing.
P N Gadgil is the second-largest jewellery retail chain in Maharashtra with over 48 stores currently. It has recently been focusing on improving its unit economics, increasing its mix of make-to-order offerings and improving its product mix.
Motilal Oswal expects 44 new store additions over the next three years, bringing the total store count to 80 by financial year 2027, compared to 36 in financial year 2024. The company already has plans to open another eight stores in the rest of the current financial year.
The successful execution of store rollouts, gold hedging policy and an improvement in operating margins will be key for the stock to re-rate going forward, according to Motilal Oswal.
Volatility in gold prices as the company is not fully hedged, operating performance of new stores and intensified competition of new stores that will hurt margins are some of the key downside risks to Motilal Oswal’s estimates.
The brokerage is valuing the stock at 35 times financial year 2026 price-to-earnings multiple.
With the IPO proceeds, the company plans to reduce debt repayment by over ₹200 crore. It is also looking to add gold metal loans, which may enhance its gold hedging strategy. Motilal Oswal expects P N Gadgil’s PBT margin to expand to 4.6% by financial year 2027, compared to 3.4% in the previous financial year.
Shares of P N Gadgil Jewellers are off the highs of the day but are trading with gains of 2.5% currently at ₹788.
First Published: Dec 9, 2024 1:45 PM IST
