PN Gadgil Jewellers' Shares Rise 2.5% After Strong Q3FY25 Update

Shares of PN Gadgil Jewellers rose by over 2.5% to ₹690 apiece on January 9, following the company’s strong business update for the third quarter of FY25.

Despite this recent gain, the stock has fallen over 12% in the past month, in contrast to the 3% decline in the Nifty 50 index. On November 22, 2024, the stock reached a 52-week low of ₹611 apiece.

For Q3FY25, the company reported a 24% year-on-year (YoY) increase in revenue, driven by strong same-store sales growth and robust festive demand during Dussehra, Diwali, and the wedding season.

The retail segment led the way with a 42% YoY increase in revenue, while the franchise segment posted an impressive 87% YoY growth. The e-commerce segment also performed well, with revenue surging 98% YoY. Additionally, the diamond category reported a 40% YoY rise in revenue.

The company also provided an update on its store expansion efforts, having opened nine new outlets as part of its plan to launch 12 stores. These openings occurred over nine consecutive days during Navratri in October 2024. PN Gadgil plans to open three more stores in the next quarter, continuing its expansion.

For the quarter, the company achieved consolidated YoY revenue growth of 24% compared to the same period the previous year.

Motilal Oswal analysts recently initiated coverage on PN Gadgil Jewellers with a "buy" recommendation and a target price of ₹950 per share, citing the company’s effective store rollout strategy, prudent gold hedging policy, and improving operating margins as key factors that could drive a re-rating of the stock.

As the jewellery market becomes more formalized, analysts believe PN Gadgil is well-positioned for growth, thanks to its aggressive network expansion. While strengthening its presence in Maharashtra, the company is also expanding into markets like Madhya Pradesh, Chhattisgarh, and Bihar.

Analysts predict strong growth for PN Gadgil from FY24 to FY27, with an estimated compound annual growth rate (CAGR) of 23% for revenue, 31% for EBITDA, and 36% for profit after tax.