PC Jeweller IPO has been subscribed 6.85 times on an overall basis. The IPO was open for subscription between December 10, 2012 and December 12, 2012

The category-wise subscription statistics are as under:

PC Jeweller IPO, which opened for subscription from yesterday, has been bid around 40% on an overall basis as per data available on NSE website till December 11, 2012 1900 hrs IST

The IPO has received bids for 1,70,46,990 Equity Shares on an overall basis with bids received for 55,82,790 at cut-off price. The issue consists of Public offer of 45,133,500 equity shares of Rs.10 each (including Anchor Portion of 67,16,250 equity shares). The shares are issued in a price band of Rs.125/- to Rs.135/- per equity share with retail investors and eligible employees being entitled to Rs.5/- discount on the issue price

PC Jeweller Ltd is an established jewellery retailer in North India. Company's operations include the manufacture, retail and wholesale of jewellery. PCJ offers a wide range of products including gold jewellery, diamond jewellery and other jewellery including silver articles. The company provides 100% Hallmarked jewellery and Certified Diamond jewellery.

QIB: 0.00 times
Non-Institutional Investors: 0.11 times
Retail: 0.09 times
Employees: 0.00 times
Overall: 0.06 times

PC Jewellers (PCJ) is coming out with an initial public offering (IPO) of 4.51 crore equity shares with a Face Value of Rs.10 each (including employee reservation of 3.6 Lakh shares). The shares will be offered in a price band of Rs.125/- to Rs.135/- per equity share. The Issue will remain open between December 10, 2012 and December 12, 2012. Retail Investors and Employees of the company will be offered a discount of Rs.5/- per equity share


Company Profile and Promoters:

PC Jeweller Ltd is an established jewellery retailer in North India. Company's operations include the manufacture, retail and wholesale of jewellery. PCJ offers a wide range of products including gold jewellery, diamond jewellery and other jewellery including silver articles. The company provides 100% Hallmarked jewellery and Certified Diamond jewellery. PC Jeweller have 30 showrooms under the "PC Jeweller" brand located across 23 cities in north and central India. Company is planning to expand their showroom network across India by adding 20 more in next two years, including in southern and western parts of India. They have manufacturing facilities at 5 locations. The company is promoted by Balram Garg and Padam Chand Gupta


IPO Rating:

CRISIL has assigned a CRISIL IPO Grade "3/5" (pronounced "three on five") to the proposed initial public offer (IPO) of PC Jeweller Ltd (PCJ). This grade indicates that the fundamentals of the IPO are ‘average’ relative to the other listed equity securities in India. CRISIL assigns IPO grading on a scale of IPO Grade 5 to IPO Grade 1, with IPO Grade 5 indicating strong fundamentals and IPO Grade 1 indicating poor fundamentals. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy, sell or hold the graded instrument, or a comment on the graded instrument’s future market price or its suitability for a particular investor

According to the grading report, the assigned grade reflects its seven-year-old presence and the ensuing strong reputation in an industry quintessentially benefited by the country’s obsession for gold. Strong brand recall, successful branch expansion (from one to 30 showrooms in the past seven years) and stellar increase in gold prices have added shine to PCJ’s top line, which has grown at a three-year CAGR of 69%.

However, competition in the jewellery retailing market - likely to intensify following planned expansions by regional/traditional players - poses a significant risk



Key Strengths:

• Compared with other gold jewellery players, PCJ’s revenue mix leans towards higher-margin diamond jewellery
• The organised players account for approximately 16-18% share (including the regional players) of the Indian jewellery industry. The low penetration presents a good growth opportunity for a player like PCJ on account of the rising disposable incomes, which are likely to fuel the growth of jewellery consumption in the country
• The operating profit grew at a CAGR of 96.3% in the last 4-5 years from around Rs.20 crore in FY2008 to Rs.330 crore in FY2012. The operating profit margin of the company at approximately 11%, is respectable enough when compared with peers. The Net Profit Margin stands at around 7.7% which also is one of highest amongst peers

Risks:

• The company generates a major portion of its domestic sales from its showrooms in Delhi 
• PCJ’s plans to add 20 showrooms by FY14 across India should mitigate the risk of regional concentration but the opening of new stores in a competitive market is likely to put pressure on profitability due to higher marketing expenses and working capital requirement. 
• Moreover, the compensation structure for key management personnel appears low, which can lead to attrition.
• Uncertain macro environment may put pressure on sales. The jewellery segment is discretionary in nature and is a luxury item. The current uncertain macro economic environment may drag on the company’s performance for the near term.

Remarks:

The share offered at roughly 7-8 times PE multiple, which is neighter generous nor blown out of proportions. Though participating in the IPO may be apt, however, investors may not be willing to go full throttle on the IPO

The primary markets in India are expected to get a perk up and kick-start again with some of most anticipated names expected to enter the capital markets in December 2012. Here's a look at some of the IPOs expected to hit the streets in coming month:

1. Veto Switchgears IPO
The company is a manufacturer and seller of wires, cables and electrical accessories, has a diversified product basket, which includes around 20 product categories. The IPO would be open for subscription between December 3, 2012 and December 5, 2012. The price band would be Rs.48/- to Rs.50/- per equity share

2. CARE IPO
Credit Analysis & Research Ltd (CARE) is a second largest full service credit rating company in India. The company offers rating and grading services across a diverse range of instruments and industries including IPO grading, equity grading, and grading of various types of enterprises, including shipyards, maritime training institutes, construction companies and rating of real estate projects, among others. The IPO would be open for subscription between December 7, 2012 and December 11, 2012

3. Bharti Infratel IPO
Bharti Infratel Limited, one of the largest tower infrastructure providers in India, based on the number of towers that Bharti Infratel owns and operates, is a provider of tower and related infrastructure. Bharti Infratel deploys, owns and manages telecom towers and communication structures for all wireless operators. The IPO would be open for subscription between December 10, 2012 and December 14, 2012

4. PC Jewellers IPO
PC Jeweller Ltd is an established jewellery retailer in North India. Company's operations include the manufacture, retail and wholesale of jewellery. PCJ offers a wide range of products including gold jewellery, diamond jewellery and other jewellery including silver articles. The Delhi-based jeweler currently has 20 stores, the brand has many showrooms in 8 states of India. The IPO would be open for subscription between December 10, 2012 and December 12, 2012