PN Gadgil Jewellers IPO: PN Gadgil Jewellers IPO: The top brass of the ‘Peshwa route’ and how it became a traditional jeweller in Maharashtra

The second largest in Maharashtra jewelry chainPN Gadgil Jewellers will launch its initial public offering (IPO) on September 10, 2024. The company aims to raise around ₹1,100 crore, distinguishing it as the only organised family jeweller in India. With its deep generational customer ties and SOP-driven approach, this IPO stands out as unique. ET Markets, in an exclusive episode of IPO TALK, spoke with Saurabh GadgilManaging Director of PN Gadgil Jewellers, to understand how well the company is positioned at the moment and what are the prospects.

Extracts:

PN Gadgil is one of the leading players in the jewellery sector in Maharashtra. Can you tell us a bit about the company and its business model?
Saurabh Gadgil: Sure, let me start from the beginning. The company started in 1832, making us one of the oldest jewellery companies in the country. After celebrating 125 years in Sangli, where we started, we expanded to Pune, which has been our growth hub. I joined the business in 2000 when we were a single-store family business with a top line of ₹20 crore. Today, as of March 2024, we have 39 stores and a revenue of ₹6,000 crore, and are now a fully professionally managed company. We have achieved several firsts in the industry. Our revenue per square foot stands at ₹6 lakh, the highest in the industry. Our revenue per store is over ₹170 crore, again leading the industry. I am proud to say that between FY22 and FY24, we grew at a CAGR of over 50%, making us the fastest growing company among the organised and listed players in the country.Watch the full interview here

What geographic regions does the company focus on?
Saurabh Gadgil: Our primary focus is Maharashtra, where we are currently the second-largest jewellery company in terms of number of stores. With the IPO, we aim to become the largest jewellery company in the state, both in terms of stores and revenue. We also plan to expand, like the Peshwas, from Maharashtra to Madhya Pradesh, Chhattisgarh, Jharkhand, UP, Bihar and Delhi. Our vision is to become a 100-store company in the next five to six years.

Today, we are professionally managed at every level. For the past three years, we have been recognized as a great place to work. What makes us unique is that we are the only organized family jewelry store in the country, with a legacy of customers spanning three or four generations. We combine this family heritage with professional systems and processes, allowing us to continually grow and capture more market share.

As an insider, what is your take on the Indian jewellery market?
Saurabh Gadgil:The Indian jewellery market is huge and growing rapidly. It is currently valued at around $80 billion and is expected to cross $200 billion in the coming years. Post COVID-19, we have seen a significant shift in consumer behaviour. Customers now prioritise value, brand trust, after-sales service and long-term relationships over discounts and deals.

A key differentiator for us has been our focus on custom and made-to-order jewelry, which accounts for nearly 30% of our business. This personal touch, combined with our scale, sets us apart. The market is also moving toward organized players, driven by mandatory stamping and the demand for transparency, quality, and advanced technology in the shopping experience. While the industry is evolving, the core remains the same: strong, deep customer relationships. Today, word of mouth and social media play a crucial role in attracting and retaining customers, and that’s where we excel.

Can you also shed some light on the company’s finances?
Saurabh GadgilWe closed March 2024 with revenues of around Rs 6,100 crore, EBITDA of Rs 280 crore and PAT of Rs 155 crore. Our ROCE and ROE are close to 30%, and we have seen a CAGR of over 50% in volume growth over the last three years. We expect continued growth, with plans to expand existing stores and open new ones. We are targeting a 30% increase in top line revenue this financial year and are on track to achieve that.

The IPO is priced at around Rs 1,100 crore. Can you share the targets and how debt repayment will be managed?
Saurabh Gadgil:The IPO size is ₹1,100 crore, with ₹850 crore as fresh issue and ₹250 crore as OFS. Of the ₹850 crore, ₹400 crore will be used for opening of nine new stores this financial year. Another ₹300 crore will be used for repayment of loans. We currently have ₹250 crore in working capital and ₹60 crore in term loans. The plan is to transition to non-fund-based limits and use gold metal loans to bring down interest costs from 9.5% to around 5.5%, while also using it to hedge against price fluctuations. The remainder will be used for general corporate purposes. The entire focus remains on expanding our jewellery business.

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