PN Gadgil Q3 Review — Motilal Oswal Retains 'Buy' On Successful Store Rollouts, Effective Gold Hedging Policy

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Motilal Oswal Report

With a more favorable product mix, operating leverage (as the initial expansion is focused on core markets, eliminating the need for additional corporate overhead), and improved sourcing, PN Gadgil Jewellers Ltd. is well-positioned to expand its operating margin. We model an Ebitda margin of ~5% for FY27 and FY27.

The company has strengthened its balance sheet by reducing debt, having repaid Rs 3 billion from IPO proceeds. It has also implemented a robust hedging strategy through Gold Metal Loans, with 84% hedged by Dec’24 and now fully covered. This will lower interest costs and further boost profitability.

We model a CAGR of 23% in sales, 31% in Ebitda, and 29% in adjusted profit after tax over FY24- 27. With the successful execution of store rollouts, an effective gold hedging policy, and margin expansions, we reiterate our Buy rating on the stock with a target price of Rs 950 at 35 times December-26 earnings per share.

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