MOSL: PC JEWELLER (Buy)-Demand outlook robust-growth opportunity massive-Domestic jewelry retail business to grow at a CAGR of 25-30%
PC Jeweller: Demand outlook robust; growth opportunity massive; Domestic jewelry retail business to grow at a CAGR of 25-30% over the next five years
(PCJL IN, Mkt Cap USD3.3b, CMP INR549, TP INR645, 17% Upside, Buy)
We recently met the management of PC Jeweller (PCJL). Our key takeaways:
- PCJL remains confident of 25-30% CAGR in the domestic jewelry retail business over the next five years.
- The franchisee model is working well so far; going forward, franchisee stores will be ~80% of incremental annual store openings.
- PCJL has massive opportunity to grow at the cost of unorganized players. Though competition from organized players will increase as the salience of the organized segment goes up 3-4 years down the line, the company believes its strengths on design (craft) and low cost manufacturing will serve it well in the long term.
- We have a BUY rating on the stock, with a target price of INR645, valuing the company at 29x December 2018E EPS, 40% discount to Titan. We believe that the valuation gap vis-à-vis Titan will shrink further, once PCJL demonstrates its ability to maintain its revenue and earnings trajectory.
PC Jeweller Limited is a jewelry company. The Company is engaged in the business of manufacture, retail and export of jewelry. It offers a range of products including 100% hallmarked gold jewelry, certified diamond jewelry and other jewelry, including silver articles, with a focus on diamond jewelry and jewelry for weddings. It sells jewelry through its online sale portal www.wearyourshine.com. Its jewelry category includes rings; earrings; pendants; mangalsutras; chains and necklaces; bangles and bracelets, and nose pins. It also offers platinum, gemstone, men's and kids jewelry. It offers jewelry under various brands, including PC Jeweller, blue nile, PNG Jewellers, Waman Hari Pethe, asmi, Gili, sangini, nirvana, Nakshatra, Kama Jewellery, flexia Jewellery, Sparkles, Candere, Diaashi Diamonds, Demira, Augrav, Urnish Jewellers, D'amor, Avsar, Ornomart, Dishi Somani, Charu Jewels, Jewels Forum, Aakanksha Rustagi, Prernaa Makhariaa, Aakarshan Jewellery, Monica Kapur and Vipin Rohilla.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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