Here are the Analyst and Brokerage
Reviews and Recommendations of PC Jeweller IPOIssue size 564cr - 608cr
Bid/Issue opens on 10th Dec 2012
Bid/Issue closes on 12th Dec 2012
Facevalue Rs 10
Price Band Rs. 125 - 135
Anand Rathi Analysts Views on the IPO of PC Jewellers
The company has been showing good traction in the performance, looking at its expansion track record and future plans shows good potential in the company. Comparing to its peers it looks fairly placed in terms of size, brand recognition and showroom counts. At higher price band the stock trades at 7.8x its FY12 earnings and with good return ratios over a period of time we feel that investors can SUBSCRIBE to the issue.
ICICI Direct Recommendation on IPO
At the IPO price band of | 125-135, the stock is available at 7.9x–8.6x annualised H1FY13 post issue diluted EPS. We believe that this pricing provides a cushion for an up move in prices. Investors can look at subscribing to the issue considering the healthy operating margins and return ratios of the company.
Ajcon Global Research Analysts Views are as Follows
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.
Reliance Securities Analyst Amarjeet S Maurya has the following views
On the margins front, in the last 4 years, the company has reported operating margins in range of 7.9-10.9%. Going forward, we believe that PCJ will improve its margins owing to strong expansion plans, increasing higher revenue contribution from diamond jewellery (high margin business) and effective cost management strategy. Considering all of the above factors, we believe that the future growth potential of the company is very promising as compared to its peers, as the company appears to be fairly placed in terms of size, brand recognition and showroom numbers. At higher price band the stock trades at 8.5x its FY2013 annualized earnings, which is reasonable in our view, and hence, we recommend investors to SUBSCRIBE to the issue
Nirmal Bang analyst Ruchita Maheshwari has the following Views on the IPO of PC Jewellers
PCJ has over two decades of rich experience in the jewellery business where it enjoys a strong execution capability. On an average the company has opened 5 new showrooms every year which gives us confidence that the company will be able to execute addition of 20 new showrooms by FY14E. The company focuses on diamond jewellery and continues to do so in the future will help the company in maintaining its margins going forward as the diamond business is of high operating margin compared to gold. PCJ procures gold through a ‘Gold Lease’ scheme under which fluctuation of gold price is hedged between the time of procurement of gold as a raw-material and final selling of finished products to the customers. This minimizes the risk of gold price fluctuation. A PCJ share is offered at 8.5x P/E calculated at higher band and 7.9x at lower band of price for 6MFY13E annualized which we feel is attractively priced compared to its peers. We also feel that the PCJ issue is attractively priced as the company has lower multiple as compared to other peers and also enjoys higher growth rate, which in our view; offers an investment opportunity both for listing gain and long term investment. Therefore, we recommend “SUBSCRIBE” rating.
SPA Securities Analyst Neha Agarwal has the following View
At the upper band of the issue price, PCJ is available at a P/BV of 1.8x and P/E of 8.2x. Although this is in line with valuation commanded by Gitanjali Gems, however, PCJ enjoys higher margin. The company plans to open 20 stores by FY14 (currently 30) which should ensure healthy growth rates over the next 2-3 years. Hence, we expect the stock to trade at a premium to Gitanjali Gems and recommend to SUBSCRIBE to the issue for listing gains as well as for the long term.
Religare Analysts Varun Lohchab, Gaurang Kakkad and Prasad Dhake said
SUBSCRIBE to the PC Jewellers (PCJ) IPO given the robust growth opportunity and attractive valuations – The IPO is attractively priced even at the top end of the band (Rs 125-Rs 135). Further, PCJ enjoys a strong presence in North India and plans to expand its retail footprint from 30 stores currently to 50 by FY14. The company is poised to benefit from the growing salience of higher-margin diamond jewellery business. Balance sheet/return ratios are healthy with PCJ at net cash position post the IPO and FY12 ROE of 41%. Valuations at ~8x FY12 P/E look attractive on strong growth and ROE profile.
Microsec has the following recommendation,
PC Jeweler is one of the leading and diversified jewellery manufacturer as well as exporter of India. At the upper price band of Rs. 135 and lower price band of Rs.125, the issue of PC Jeweler is attractively priced at around 8.5x and 7.9x its post dilution FY13E EPS of INR15.9. We recommend investors to Subscribe to the issue for listing gain purpose only.
