The September quarter results represent a remarkable turnaround from the previous year's subdued performance, with the company benefiting from strong festive demand, improved operational efficiency, and better margin management. On a sequential basis, net profit grew 14.38% from Q1 FY26's ₹69.34 crores, whilst revenue expanded 27.01% quarter-on-quarter to ₹2,177.62 crores, indicating sustained momentum through the critical festive season.
The performance assumes particular significance given the challenging base effect from the previous year, when the company reported a net profit of just ₹34.92 crores in Q2 FY25. The dramatic improvement underscores management's success in capturing festive demand whilst simultaneously expanding margins and controlling costs.
Quarterly Performance Trajectory: Consistent Upward Momentum
| Quarter | Revenue (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | OPM (%) |
|---|---|---|---|---|---|
| Sep'25 | 2,177.62 | +27.01% | 79.31 | +14.38% | 4.92% |
| Jun'25 | 1,714.56 | +7.95% | 69.34 | +11.86% | 6.41% |
| Mar'25 | 1,588.22 | -34.80% | 61.99 | -27.95% | 5.93% |
| Dec'24 | 2,435.75 | +21.71% | 86.04 | +146.39% | 5.04% |
| Sep'24 | 2,001.31 | +19.97% | 34.92 | -1.13% | 2.70% |
| Jun'24 | 1,668.18 | +10.33% | 35.32 | -35.70% | 3.86% |
| Mar'24 | 1,512.02 | — | 54.93 | — | 5.88% |
Financial Performance: Margin Expansion Drives Profitability
The September quarter's financial performance demonstrates P N Gadgil Jewellers' ability to translate top-line growth into substantial bottom-line expansion. Net sales of ₹2,177.62 crores represented an 8.81% year-on-year increase, whilst the 27.01% sequential growth reflected the typical festive season surge in jewellery demand. More impressively, the company achieved this revenue growth whilst significantly improving profitability metrics across the board.
Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) surged to ₹107.13 crores in Q2 FY26, yielding an operating margin of 4.92%—a substantial 222 basis points improvement from the 2.70% margin recorded in the same quarter last year. This margin expansion signals enhanced operational efficiency, better product mix management, and improved pricing power during the festive season.
The profit after tax (PAT) margin expanded to 3.64% in Q2 FY26 from 1.74% in Q2 FY25, reflecting both improved operational efficiency and better cost management. Interest costs rose to ₹19.84 crores from ₹12.90 crores year-on-year, primarily reflecting higher working capital requirements during the festive season. However, this increase was more than offset by the robust operating profit growth and a notable contribution from other income, which surged to ₹35.81 crores from ₹11.80 crores in the previous year's corresponding quarter.
Tax expenses for the quarter stood at ₹29.84 crores, representing an effective tax rate of 27.34%, slightly higher than the 23.81% rate in Q2 FY25. The normalisation of the tax rate indicates the company's return to regular tax provisions following any previous benefits or adjustments.
Operational Excellence: Strong Capital Efficiency Underpins Growth
P N Gadgil Jewellers' operational metrics reveal a company operating with impressive capital efficiency. The return on equity (ROE) of 17.44% stands as a testament to management's ability to generate strong returns on shareholder capital, positioning the company favourably within the jewellery retail sector. This high ROE reflects not just profitability but also efficient asset utilisation and prudent capital allocation.
The return on capital employed (ROCE) of 18.75% on an average basis further underscores the company's operational excellence, indicating that every rupee of capital deployed generates healthy returns. The latest ROCE of 16.91% remains robust, though slightly below the average, reflecting the seasonal nature of working capital requirements in the jewellery business.
Key Strength: Robust Balance Sheet Position
P N Gadgil Jewellers maintains a conservative financial structure with a debt-to-EBITDA ratio of just 1.36 times, indicating comfortable leverage levels. The net debt-to-equity ratio of 0.35 provides substantial headroom for growth investments whilst maintaining financial flexibility. With no promoter pledging and zero pledged shares, the company's governance credentials remain strong, providing comfort to institutional and retail investors alike.
The company's balance sheet as of March 2025 shows shareholder funds of ₹1,553.94 crores, a dramatic increase from ₹534.44 crores in the previous year, primarily driven by the successful initial public offering and retained earnings. Long-term debt reduced significantly to ₹8.11 crores from ₹91.94 crores, whilst current liabilities expanded to ₹1,484.28 crores, reflecting higher working capital requirements to support the growing business scale.
Fixed assets stood at ₹222.00 crores, representing the company's expanding retail footprint, whilst current assets surged to ₹2,668.33 crores from ₹1,207.32 crores year-on-year. This substantial increase in current assets primarily reflects higher inventory levels to support festive season demand and the company's store expansion strategy.
Industry Context: Navigating a Competitive Landscape
The Indian jewellery retail sector continues to witness robust growth, driven by rising disposable incomes, increasing preference for organised retail, and growing consumer confidence in branded jewellery. P N Gadgil Jewellers operates in a highly competitive environment dominated by both regional players and national chains, with companies like Titan, Kalyan Jewellers, and Thangamayil Jewellers vying for market share.
The company's performance during the September quarter—traditionally a strong period for jewellery sales given the festive season and wedding demand—demonstrates its ability to capture market share in its core Maharashtra market whilst maintaining healthy margins. The 8.81% year-on-year revenue growth, though modest compared to the triple-digit profit growth, reflects the challenging comparison base and competitive intensity in the sector.
Competitive Positioning: Regional Strength Meets National Ambitions
P N Gadgil Jewellers' heritage brand, established presence in Maharashtra, and focus on traditional designs provide differentiation in an increasingly crowded market. The company's ability to expand margins whilst growing revenue indicates pricing power and customer loyalty—critical competitive advantages in the jewellery retail business where trust and brand reputation drive purchasing decisions.
Peer Comparison: Valuation Discount Despite Strong Fundamentals
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| P N Gadgil Jewellers | 27.44 | 4.79 | 17.44 | 0.35 | — |
| Titan Company | 91.53 | 29.52 | 29.14 | 0.70 | — |
| Kalyan Jewellers | 38.99 | 8.46 | 13.17 | 0.85 | 0.34 |
| Thangamayil Jewellers | 47.65 | 9.88 | 18.77 | 0.77 | 0.34 |
| Ethos | 71.35 | 4.84 | 8.68 | -0.34 | — |
| PC Jeweller | 12.60 | 1.14 | 2.00 | 0.20 | — |
P N Gadgil Jewellers trades at a significant valuation discount to its peer group, with a price-to-earnings ratio of 27.44 times compared to the sector average of approximately 52 times. This discount appears unjustified given the company's superior ROE of 17.44%—higher than most peers except Titan and Thangamayil—and its conservative debt-to-equity ratio of 0.35, the lowest among major players.
The price-to-book value ratio of 4.79 times, whilst higher than PC Jeweller's distressed valuation, remains substantially below Titan's 29.52 times, Kalyan's 8.46 times, and Thangamayil's 9.88 times. This valuation gap suggests the market has not fully recognised P N Gadgil's improving fundamentals, strong festive season performance, and robust return ratios.
The company's absence of dividend payments reflects management's focus on reinvesting profits into store expansion and working capital to support growth. This strategy appears prudent given the company's relatively recent listing and significant growth opportunities in underpenetrated markets.
Valuation Analysis: Attractive Entry Point for Patient Investors
At the current market price of ₹590.20, P N Gadgil Jewellers trades at a trailing twelve-month P/E ratio of 27.44 times, representing a substantial discount to the industry average P/E of 59 times. This valuation gap appears particularly stark given the company's strong operational performance, improving margins, and robust return ratios.
The EV/EBITDA multiple of 20.12 times and EV/EBIT of 22.54 times suggest the market is pricing in moderate growth expectations, despite the company's demonstrated ability to deliver triple-digit profit growth in recent quarters. The EV/Sales ratio of 1.10 times remains reasonable for a jewellery retailer with improving margins and strong brand equity in its core markets.
The stock's valuation grade recently shifted to "Expensive" from "Fair" on September 11, 2025, reflecting the post-listing rally and market recognition of the company's improving fundamentals. However, this classification appears conservative given the peer group comparison and the company's growth trajectory. The 52-week trading range of ₹474.00 to ₹700.00 provides context, with the current price sitting 15.69% below the high and 24.51% above the low.
Based on the company's trailing twelve-month earnings and assuming a fair P/E multiple of 35-40 times (still below the industry average but reflecting the company's growth profile), a fair value estimate of ₹700-800 per share appears reasonable, suggesting potential upside of 18-35% from current levels.
Shareholding Pattern: Stable Promoter Base, Gradual Institutional Interest
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 83.11% | 83.11% | 83.11% | 83.11% | 0.00% |
| FII | 0.75% | 0.91% | 0.64% | 0.65% | -0.16% |
| Mutual Funds | 4.01% | 4.10% | 4.27% | 4.19% | -0.09% |
| Insurance | 0.35% | 0.58% | 0.58% | 0.73% | -0.23% |
| Other DII | 0.44% | 0.31% | 0.49% | 0.57% | +0.13% |
| Non-Institutional | 11.34% | 10.98% | 10.91% | 10.76% | +0.36% |
The shareholding pattern reveals a stable promoter base holding 83.11%, with the SVG Business Trust (Radhika Saurabh Gadgil) maintaining consistent ownership since the company's listing. This high promoter holding provides governance comfort and aligns management interests with shareholders, whilst the zero pledging of promoter shares eliminates concerns about financial stress.
Institutional holdings remain modest at 5.55%, with mutual funds holding 4.01% and foreign institutional investors maintaining a minimal 0.75% stake. The gradual decline in mutual fund and insurance holdings over recent quarters (-0.09% and -0.23% respectively in Q3 FY26) suggests some profit-booking following the stock's strong post-listing performance. However, the presence of 10 mutual funds and 21 FIIs indicates growing institutional awareness.
The steady increase in non-institutional holdings to 11.34% reflects retail investor interest in the company's growth story. As the company continues to demonstrate strong operational performance and margin expansion, institutional participation is likely to increase, potentially providing support for valuation re-rating.
Stock Performance: Recovery Momentum Building After Correction
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +7.41% | +0.58% | +6.83% |
| 1 Week | +9.08% | +2.94% | +6.14% |
| 1 Month | -3.60% | +0.59% | -4.19% |
| 3 Months | -9.67% | +1.02% | -10.69% |
| 6 Months | +6.73% | +5.27% | +1.46% |
| YTD 2026 | -2.85% | -1.36% | -1.49% |
| 1 Year | +5.59% | +7.97% | -2.38% |
P N Gadgil Jewellers' stock has demonstrated significant volatility since its listing, with the recent 7.41% single-day gain following Q2 results indicating renewed investor interest. The one-week return of 9.08% and six-month return of 6.73% suggest recovery momentum is building after the correction witnessed in the three-month period.
The stock's underperformance versus the Sensex over the one-year period (-2.38% alpha) and year-to-date (-1.49% alpha) reflects profit-booking following the initial post-listing euphoria and broader market volatility. However, the strong positive alpha of 6.83% on the results day and 6.14% over the past week indicates the market is beginning to recognise the company's improving fundamentals.
The technical picture shows the stock trading below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), suggesting it remains in a consolidation phase. The current "Mildly Bullish" technical trend, upgraded from "Bullish" in November 2025, indicates cautious optimism amongst technical analysts. With immediate support at ₹474.00 (52-week low) and resistance at ₹565.82 (20-day moving average), the stock appears to be building a base for the next leg of upward movement.
The high beta of 1.35 indicates the stock is 35% more volatile than the broader market, making it suitable for investors with higher risk tolerance. The risk-adjusted return of 0.16 over one year, whilst positive, remains below the Sensex's 0.69, reflecting the stock's recent correction and higher volatility (34.40% versus Sensex's 11.53%).
Investment Thesis: Quality Franchise at Reasonable Valuation
The investment case for P N Gadgil Jewellers rests on several compelling pillars: a heritage brand with strong regional presence, demonstrated ability to scale operations profitably, improving margin trajectory, and conservative financial management. The company's ROE of 17.44% ranks amongst the highest in the sector, indicating superior capital allocation and operational efficiency.
The proprietary Mojo score of 74/100 with a "BUY" rating reflects the balanced assessment across valuation, quality, financial trends, and technical factors. The company's "Good" quality grade, based on long-term financial performance, provides comfort about business sustainability, whilst the "Positive" financial trend indicates improving operational momentum.
Key Strengths & Risk Factors
KEY STRENGTHS
- Superior Capital Efficiency: ROE of 17.44% demonstrates excellent returns on shareholder capital, amongst the highest in the jewellery retail sector
- Strong Margin Expansion: Operating margin improved 222 bps YoY to 4.92%, indicating pricing power and operational leverage
- Conservative Leverage: Debt-to-EBITDA of 1.36x and net debt-to-equity of 0.35 provide financial flexibility for growth investments
- Zero Promoter Pledging: Clean governance structure with 83.11% stable promoter holding and no pledged shares
- Heritage Brand Value: Established presence in Maharashtra with strong customer loyalty and brand recognition
- Valuation Discount: Trading at 27.44x P/E versus industry average of 59x despite superior fundamentals
- Robust Long-term Growth: Five-year sales CAGR of 26.50% and EBIT growth of 22.39% demonstrate sustainable expansion
KEY CONCERNS
- High Inventory Requirements: Current assets surged to ₹2,668 crores, indicating substantial working capital intensity
- Limited Institutional Participation: Only 5.55% institutional holdings may limit liquidity and valuation re-rating potential
- Regional Concentration: Heavy dependence on Maharashtra market exposes company to regional economic cycles
- Competitive Intensity: Facing competition from both national chains and regional players in a fragmented market
- Gold Price Volatility: Business performance susceptible to fluctuations in gold prices affecting demand and margins
- High Stock Volatility: Beta of 1.35 and volatility of 34.40% make it unsuitable for risk-averse investors
- No Dividend Policy: Company retains all profits for growth, providing no income component to returns
Outlook: What to Watch in Coming Quarters
POSITIVE CATALYSTS
- Store Expansion Momentum: New store openings in underpenetrated markets could accelerate revenue growth
- Margin Sustainability: Ability to maintain 4-5% operating margins would support earnings growth
- Institutional Buying: Increased participation from mutual funds and FIIs could support valuation re-rating
- Wedding Season Demand: Strong wedding season performance in Q3/Q4 would validate growth trajectory
- Market Share Gains: Continued outperformance versus unorganised sector supports long-term thesis
RED FLAGS TO MONITOR
- Margin Compression: Any decline in operating margins below 4% would signal competitive pressure
- Working Capital Stress: Further increase in inventory levels without corresponding sales growth
- Debt Increase: Rising leverage to fund expansion could pressure return ratios
- Institutional Selling: Continued reduction in mutual fund holdings would be concerning
- Same-Store Sales Decline: Negative like-for-like growth would indicate market share loss
The Verdict: Attractive Accumulation Opportunity
Score: 74/100
For Fresh Investors: Current levels present an attractive entry point for investors with 2-3 year horizon. The combination of strong operational performance, improving margins, superior return ratios, and significant valuation discount to peers creates a compelling risk-reward proposition. Consider accumulating in tranches given the stock's high volatility.
For Existing Holders: Continue holding with conviction. The Q2 FY26 results validate the investment thesis of sustainable margin expansion and profitable growth. The recent correction has created a favourable base for the next leg of upward movement. Use any further weakness to average down.
Fair Value Estimate: ₹750 per share (27% upside potential from current levels of ₹590.20)
Rationale: P N Gadgil Jewellers combines a heritage brand, strong regional presence, improving operational metrics, and conservative financial management. The 127% YoY profit growth in Q2 FY26, coupled with margin expansion and superior ROE of 17.44%, demonstrates the company's ability to scale profitably. Trading at a significant discount to industry multiples despite comparable or superior fundamentals, the stock offers value for patient investors. The "Good" quality grade, "Positive" financial trend, and building technical base support the BUY recommendation.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. The jewellery retail sector involves specific risks including gold price volatility, regional economic cycles, and intense competition. The high beta and volatility of P N Gadgil Jewellers shares make them suitable only for investors with appropriate risk appetite and investment horizon.
