PN Gadgil Jewellers IPO: Top brass on 'Peshwa route' and how it became a legacy jeweller in Maharashtra

Maharashtra's second-largest jewellery chain, PN Gadgil Jewellers, is set to launch its initial public offering (IPO) on September 10, 2024. The company is aiming to raise around ₹1,100 crore, distinguishing itself as the only organized family-run jeweller in India. With its deep generational ties to customers and its SOP-driven approach, this IPO stands out as unique. ET Markets, in an exclusive episode of IPO TALK, spoke with Saurabh Gadgil, Managing Director of PN Gadgil Jewellers, to understand how well the company is positioned at this point and what are the prospects.

Excerpts:

PN Gadgil is one of the top names in the Maharashtrian jewellery segment. Can you tell us a bit about the company and its business model?

Saurabh Gadgil: Sure, let me start from the start. The company started in 1832, making us one of the oldest jewellery companies in the country. After celebrating 125 years in Sangli, where we began, we expanded to Pune, which has been our growth hub. I joined the business in 2000 when we were a single-store, family-run company with a top line of ₹20 crore. Today, as of March 2024, we have 39 stores and a revenue of ₹6,000 crore, and we’re now a fully professionally managed company.

We have achieved several industry firsts. Our revenue per square foot stands at ₹6 lakh, the highest in the industry. Our revenue per store exceeds ₹170 crore, again leading the industry. I'm proud to say that between FY22 and FY24, we've grown at a CAGR of more than 50%, making us the fastest-growing company among both organized and listed players in the country.

Watch the full interview here

Which geographical regions is the company focused on?
Saurabh Gadgil: Our primary focus is on Maharashtra, where we are currently the second-largest jewellery company by the number of stores. With the IPO, our goal is to become the largest jewellery player in the state, both in terms of stores and revenue. Beyond that, we plan to expand, much like the Peshwas, from Maharashtra into Madhya Pradesh, Chhattisgarh, Jharkhand, UP, Bihar, and Delhi. Our vision is to become a 100-store company within the next five to six years.

Today, we are professionally managed at all levels. For the past three years, we've been recognized as a great place to work. What makes us unique is that we are the only organized family jeweller in the country, with a legacy of customers spanning three to four generations. We combine this family heritage with professional systems and processes, which allows us to continually grow and capture more market share.


As an insider, what's your view on the Indian jewellery market?
Saurabh Gadgil: The Indian jewellery market is vast and growing rapidly. Currently valued at around $80 billion, it's expected to surpass $200 billion in the next few years. Post-COVID, we've seen a significant shift in consumer behavior. Customers now prioritize value, brand trust, after-sales service, and long-term relationships over discounts and offers.

A key differentiator for us has been our focus on made-to-order, customized jewellery, which accounts for nearly 30% of our business. This personal touch, combined with our scale, sets us apart. The market is also moving towards organized players, driven by mandatory hallmarking and demand for transparency, quality, and advanced technology in the buying experience. While the industry evolves, the core remains the same—strong, deep relationships with customers. 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 financials of the company?
Saurabh Gadgil: We closed March 2024 with a revenue of around ₹6,100 crores, EBITDA of ₹280 crores, and a PAT of ₹155 crores. Our ROCE and ROE are both close to 30%, and we've seen a CAGR of over 50% in volume growth over the past three years. We expect continued growth, with plans to expand existing stores and open new ones. We’re aiming for a 30% increase in top-line revenue this financial year and are on track to achieve that.

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

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