Five buzzing jewellers' stocks with sound financials

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Rally in Jewellers’ stocks creates frenzy in stock market

By S Jha

New Delhi, September 15: Sharp gains in stocks of jewellery firms are enticing investors. P N Gadgil Jewellers is commanding more than 50 per cent premium.

Reports said that P N Gadgil Jewellers could list on bourses at a healthy premium. Frenzy in stocks of Jewellers could be seen from gains in PC Jewellers.

PC Jewellers was locked in upper circuit on Friday. In one month, shares of PC Jewellers gained over 50 per cent. In six months, shares of PC Jewellers rose by over 120 per cent.

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Return on capital employed and return on equity for PC Jewellers are negative. In one year, PC Jewellers became profitable with an operating margin at 13 per cent in the June quarter this year.

After September quarter in 2022, PC Jewellers reported profit for the first time in the June quarter. This explains the frenzy for this stock in the street.

Among the Jewellers, Rajesh Exports commands a hefty PE valuation at 229.73. Kalyan Jewellers and Titan follow Rajesh Exports with PE valuations of 117 and 96 respectively.

The PE (price to equity ratio) valuation is a measure to determine the multiple of valuation being commanded by stocks against their current earning. Senco Gold and Thangamayil Jewellers have PE valuations of 45 and 51 respectively.

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P N Gadgil Jewellers at the upper band of the IPO offering has a PE valuation of 42. This will be subject to revision on the day of listing amid claims that there could be 50 per cent premium listing.

The ROE and ROCE of PN Gadgil Jewellers are both above 30. It has better financials than most of the jewellers’ stocks.

For instance, the last jewellers to list was Motisons Jewellers which has ROE and ROCE of 16.6 and 13.9 respectively. In one year, Motisons’ share has given return of over 150 per cent. It rallied by over 50 per cent in the last one month.

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Thangamayil Jeweller has ROE and ROCE of 20 and 28 respectively. At PE valuation of about 50, it is seen to be cheaper than most of the peers. But at six per cent operating margin, it’s making less money than PC Jewellers which has margin of 13 per cent.

Titan is the sectoral leader with an operating margin of nine per cent. But the face value of the Titan share is ₹1 while others mostly have ₹10 face value.

Disclaimer: This article makes no recommendation for bur or sell of shares of any company.

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