PNGS Gargi Fashion Jewellery Limited

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Rising silver prices is clearly short term negative for PNGS. But this will provide opportunity for long term investors to accumulate.

Disclosure - Invested and hence biased. Transactions in last one month

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PNGS Gargi has intimated the exchanges that they are raising funds through preferential allotment for which the meeting of board of directors is convened on 10 th July 2024 . I think this news might be the reason why the stock has zoomed in the last one week or 10 days

Pls review latest result

I am not able to buy the stock. What might be the reason? Is it low liquidity? And are there any workarounds?

Is there any answer from company regarding reduced export of natural diamonds and growth of lab grown diamonds?

Good news for organized sector companies in silver jewellary like PNGS Gargi

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Great execution by the management in q3 numbers.The opportunity seems large even from here since they are coming off of such a small base. Tracking this one closely. Does anyone have any information on what margins they make on online sales?
Disclosure, invested (recently, post q3 results)

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Their con call is on 5th Feb , here is my list of questions , may I please request everyone to provide their list also

  1. Sales mix and GM from own stores , own web site , SIS PNG , SIS non PNG and Amazon
  2. Total no of own stores , SIS PNG and SIS non PNG added in the current quarter and plan by mar 25 and by mar 26
  3. What is their market share in organised segment from fashion jewellery ; who do they consider as competitors in organised space ?
  4. How do they see trend and growth in the industry and and what’s their growth and margin guidance for FY 26 and 3 year guidance
  5. What is the SSG growth in Q3 and 9m FY 25 and guidance for FY 26
  6. What is the sustainable ebitda and Pat margin going forward , last quarter their ebitda margin is 32 pc and Pat of 25 pc
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I would also ask about their shift away from coco stores, how is that transition likely to affect growth expectations and longer term margins.

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Concall is on 5th Feb

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Here are my projections for PNGS. Incremental store addition will be low as they have maxxed out on existing parent stores - 30 new stores over FY25-27. Industry is growing at 25%, and I expect them to grow at 35-40% over the next 2-3 years. With marginally higher marketing cost (due to competition) and operating leverage, I expect margins to remain range-bound.

Thus PAT is expected to increase from current Run Rate of 30cr to 65cr over FY24-27; Currently the stock is valued at 10x P/S. If I look at the last valuation of unlisted fashion jewellers this are: Giva ~9x; Kushal Fashio Jewel ~8x; Sukkhi ~3x; But Gargi & Kushal is the only PAT profitable company with other companies doing -ve 20% EBITDA; So PNGS should command an higher multiple as FY25 P/E Ratio of 40-45x seems justified given the decent growth & profitability

Disclaimer: Invested 2yr back at much lower levels; I might sell in few months

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Going by the past track record of management , they have been under promising and over delivering ; If industry growth is 25-30 pc , they should grow cagr of 50 pc for next 3-4 years which will take them to appx 400 cr of sales by FY 29 and PAT of around 80-90 cr

yeah, management never guided for the recent 120 percent growth either, they have a history of over delivering by a huge margin, but the rapid store expansion at the initial stage was facilitated by SISs, now for them to open own exclusive stores, the economics may change substantially and so might the rate of expansion. They have given guidance of doubling in 3 years (25 percent cagr), i think even if they outperform, it should be 35-40 percent at best while still keeping margins sustained, just a thought, growth projections are of course biased and subjective.
Disclosure, invested, but recently cut a bit of weight post con call(1/3 weight).

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They have been introducing good products such as the one introduced 14c studded diamond jewellery . This forms almost 50 pc of their sales ; This product was a great product innovation

Would be interesting if they are able to leverage sales from shopper stop sis in future ; as of now this contributes only 5-6 pc of their sales .

I also think they would not expand too aggressively with their own stores on COCO model but would move on FOFO model which would be asset light .

I liked the management approach of growing without cash burn but as the sane time they should not turn over cautious and miss the industry tailwind

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I feel in the last concall Q3FY2025, the guidance was muted, they mentioned about clocking 200 cr revenue by FY2028, that seems to be a slow pace growth given the fact that in last 9 months they have already clocked 100 Cr. Any thoughts from anyone tracking this.

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They opened 2 shops recently. Management is promising. Only issue is with their guidance. Personally I was expecting 40% growth guidance (and outperforming that) because of favorable tax cuts, disposable money raised by QIP etc. I’ve concentrated bet on this company. Will see how it pans out.

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I think few things stood out in concall for myself

  1. 250 Crore revenue possibility by FY28 as per Inventory turns (Rajesh question at the end)
  2. Tax cuts, disposable money is not factored in and can increase growth
  3. Lab Grown Diamond is not an issue for them and not preferred compared to Natural diamonds

They generally under promise and over deliver considering profitablility as key criteria

Invested since long

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Its 2 year old SME company who is declaring quarterly results (when not mandated) and doing six monthly concalls. Post listing, company has performed exceptionally well as can be seen from stock price also. Its parent company (PNG & Sons) is 150+ years old and very well known in Maharashtra for its integrity, trust and conservative nature. Current director (Mr. Modak) of PNGS Gargi is CEO of PNG and Sons. Being new to the stock market (PNG & Sons is unlisted), I expect them to be conservative (sometime ultra conservative) while giving guidance on future performance. But as an investor, I would much prefer them to under promise and over deliver (which is what they are doing till now) than the other way round.

Conservative guidance disappoints the market in the short term but their actions (opening new stores, launching new designs, trying new material etc ) are quite aggressive. Going forward, I would not mind if they continue to guide 30% growth but double it (60%+) in actual results … :wink:

Disclosure - invested and forms large part of my PF. This is not a buy or sell recommendation.

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4 consecutive lower circuits after concall. Market has not taken concall lightly and feels de-rating started somehow.

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