PC Jewellers’ Margins Expand

PC Jewellers today reported its December 2012 quarter numbers. Since the company tapped the market with an IPO last year, the data for YoY comparison was not available. For this quarter, the company’s total revenue stood at Rs 1019 core, while profit for the company came in at Rs 67 crore. The stock was trading lower in its early trades, but saw some recovery post results, closing the day marginally higher by 0.28% to Rs 142.30 per share.

The company focuses on the domestic market and hence the share of domestic segment to the total turnover has increased substantially. Its domestic sales accounted for around 73% of the total turnover for the first 9MFY13, against 67% as on FY12. Exports accounted for 27% against last year’s 33% in the above mentioned period.

Even in the domestic market, the company continued its focus on diamond studded jewellery, which has a higher margin when compared to gold jewellery. The contribution from the diamond jewellery to the total domestic sales increased by 363 basis points to 30.30% for the 9MFY13, against the same period of FY12.

With more focus on diamond-studded jewellery, the EBITDA margin of the company stands at 12.14% for 9MFY13, as against 10.91% in FY12, increasing by a handsome 122 basis points. We believe that the company is focusing more on the domestic market and diamond-studded jewellery, which will drive good growth going ahead.

The company had tapped the market with an IPO in December 2012 at an issue price of Rs 135 per share (Rs 130 for retail individuals). We had recommended to go for the issue. Post listing, the scrip went higher up to Rs 194.90 per share, which is almost 50% on the issue price.

With a focus on studded-jewellery, which has better margin, we believe that the company would have good growth prospects going ahead. Hence we would advise our readers to remain invested in the counter keeping in mind long-term horizon.