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MOSL: PC JEWELLER (Not Rated)-Focused approach for future-Expects organized players to benefit from GST rollout

​PC Jeweller: Focused approach for future; Expects organized players to benefit from GST rollout

(PCJL IN, Mkt Cap USD1.2b, CMP INR417, Not Rated)

• PCJL is the second-largest listed jewelry retailer in India. It manufactures, retails and exports jewelry. It began operations in 2005, with one showroom in Karol Bagh, and now has 71 showrooms (60 own large format + 7 own small format + 4 franchisee), with operational retail space of ~380ksf. PCJL has strong presence in the metros and tier-I cities, with large format stores focused on wedding jewelry. It is now looking at expanding to (a) areas within the cities it operates in where smaller unorganized stores dominate, and (b) tier-II and tier-III cities, with smaller format stores and franchisee stores.
• We met the Managing Director of PC Jeweller (PCJL), Mr Balram Garg, and visited its South Extension store in New Delhi and its Noida plant. Our key takeaways:
• Takeaways from store and plant visit
  • We visited PCJL's South Extension store in New Delhi. A multi-storied structure, it displays diamond jewelry at the first level, gold jewelry at the second level, and high-end jewelry at the third level, which also houses an exclusive lounge. The store caters to the ultra-rich, rich and upper middle class customers. At any time, the store has an inventory valued at INR0.8b-1b. All of the company's showrooms have karatmeters for customers to test the purity of gold.
  • We also visited the company's Noida plant that employs ~350 people (staff, designers and karigars). All employees are on the company's payroll. The plant has a strong in-house design team comprising 60-70 designers designing both manually and using computer-aided design (CAD) software. The designers also go on the field to study design trends and competitors' offerings to keep PCJL abreast with evolving consumer needs.