Issue Highlights
Price Band
|
Rs. 125-135
|
Issue Period
|
10/12/2012-12/12/2012
|
Issue Size
|
Rs. 609 crore/4,51,33,500
shares
|
Face value
|
Rs. 10
|
Lot Size
|
90 shares
|
Issue Type
|
100% Book Building
|
Listing
|
BSE,NSE
|
Registrar
|
Karvy Comutershare
|
Maximum Retail Subscription
|
Rs. 1,94,400/ 16
lots
|
Industry
|
Gems & Jewellery
|
Discount to Retail Investors
|
Rs. 5
|
Company
Profile
Objects
of the issue
·
Towards
the establishment of new showrooms : Rs. 517 crore
·
General
corporate purposes : NA
Strengths
·
PC
jewelers has already set up 30 showrooms located across 23 cities in India and the
company intends to open 20 more by fiscal 2014
·
PC
jewelers is also involved in the online sales of the jewellery
·
The
company exports gold & diamond jewellery on a wholesale basis to
international distributors in Dubai and Hong Kong
·
The
company is known for customer-oriented marketing initiatives like ‘Jewels for
less’ scheme
Concerns
·
MD
cum promoter is availing a hefty pay package – a remuneration of Rs. 6 crore
per year against the company’s net profit of Rs. 230 crore for the FY 2012
figures out to be 2.6 per cent- which is against the spirit of professional
management
·
PC
Jewelers requires higher working capital and any sharp rise in gold prices could cause a reduction in sales
·
PC
Jewellers’ operations are highly concentrated in Delhi and NCR region and
around 60 % of the total revenue comes from this region.
·
PC
Jewellers is a high-leveraged company (relatively) and it has seen a negative
cash flow from operations for the FY 12
·
Though
interest cover is satisfactory but higher interest rate regime will be negative
for the company
Financial
analysis #
# EPS calculation has been done using
post issue equity
# All
calculations at the upper price band of Rs. 135
Parameters
|
FY 13 Annualized
|
FY 12
|
EPS
|
Rs. 15.9
|
Rs. 12.8
|
P/E
|
8.5
|
10.5
|
P/B
|
3.5
|
4.4
|
NPM
|
8%
|
8%
|
ROE
|
40.7 %
|
41.4%
|
Net Asset per
Share
|
Rs. 39
|
Rs. 31
|
Debt/Equity Ratio
|
2.5
|
2.7
|
Current Ratio
|
1.3
|
1.3
|
Interest Coverage
|
3
|
3.4
|
Inventory
Turnover Ratio
|
2.7
|
2.6
|
M-Cap/Sales
|
.7
|
.8
|
Profit CAGR (4
years)
|
96%
|
110%
|
Comparison
to peers #
# Peer data is for FY 12 as per
moneycontrol & iforp.in –duly updated as on 7/12/12
PC Jewellers
|
Gitanjali Gems
|
Titan
|
|||
P/E
|
10.5
|
29.96
|
18.57
|
42.32
|
9.88
|
ROE
|
41.4 %
|
35.78 %
|
15.62 %
|
41.87 %
|
19.5 %
|
Debt/Equity
|
2.7
|
1.27
|
1.28
|
.007 *
|
3.2
|
NPM
|
8%
|
4.13 %
|
3.85 %
|
6.71%
|
4 %
|
* FY
2011 figure
Inference
PC
Jewellers is offering its shares at very attractive levels- especially in the
peer comparison perspective -thanks to PC Jewelers’ stupendous profit growth.
As mentioned above, PC Jewelers boasts better profit margin & ROE in its
peer group. PCJ is a high-leveraged play with higher debt-to-equity ratio in the
pack. Short term borrowing shot up 4.2 times coupled with a negative cash flow
from operations in the FY 12 and it is a big concern. This stock is not a
fundamentally-sound one and does not fall in the value buying category. But the
past observations have taught us that market often overlooks the structural
concerns and reacts more on the growth prospects. So, to cut a long story short,
investors who are comfortable with the underlying risks may play on this growth
story.
Analysis is for the information purpose only. Though due diligence has been taken while preparing this report, analyst shall not be responsible for any error and shall not bear any financial liability to the users of the report.
Disclaimer
Analysis is for the information purpose only. Though due diligence has been taken while preparing this report, analyst shall not be responsible for any error and shall not bear any financial liability to the users of the report.
You may also like- Bharti Infratel IPO Review , PC Jewellers Ltd. IPO Review
0 Comments:
Post a Comment