Detailed Rationale

Crisil Ratings has revised its outlook on the long-term bank facilities and fixed deposit programme of P N Gadgil Jewellers Ltd (PNG; formerly PN Gadgil Jewellers Pvt Ltd; part of the PNG group) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘Crisil A’. The rating on the short-term bank facilities has been reaffirmed at ‘Crisil A1’. Further, the rating on bank facilities worth Rs 19 crore has been withdrawn, following a request from the company. This is in line with the withdrawal policy of Crisil Ratings.

 

The revision in outlook reflects the ongoing improvement in PNG’s business risk profile supported by healthy growth in revenues and improving profitability levels. PNG reported a robust 26% yoy growth in revenues to Rs 7,699 crore in fiscal 2025, driven by healthy same-store sales growth, incremental contribution from new stores, higher realizations from elevated gold prices, and partially supported by low-margin bullion sales. The company is expected to sustain strong double-digit growth in turnover over the medium term, driven by expansion plans and higher realisations. Operating margins remained stable during fiscal 2025 at 4.46% which is however expected to improve to 5–6% over the medium term, aided by the discontinuation of low margin gold sales from the refinery segment from Q3 FY25 onwards, higher studded share and the sustained benefits of economies of scale.

 

PNG expanded its retail footprint significantly during fiscal 2025 funded through the proceeds of Rs. 850 crore received from the initial public offering (IPO) in September 2024, with a net addition of 17 stores taking the total store count to 53 as on March 31, 2025. Going forward, PNG has expansion plans to add 25 stores in fiscal 2026 (of which 15 stores will be company owned and operated) which will be partly funded by debt and internal accruals. Also, the company is diversifying its regional presence by moving out of Maharashtra and Goa to Madhya Pradesh, Uttar Pradesh and Bihar. The performance of these stores outside Maharashtra will be a key monitorable.

 

The company’s financial risk profile also improved in fiscal 2025, supported by healthy operating performance and IPO proceeds. Adjusted gearing declined to 0.61x in fiscal 2025 compared to 0.91 in fiscal 2024 while interest coverage came in at 9.3x in fiscal 2025 compared to 5.9x in fiscal 2024.  A portion of IPO proceeds was utilized to repay long-term borrowing and high cost working capital borrowing while the company simultaneously availed gold metal loans (GML) (Rs 485 crore outstanding as on March 31, 2025) backed entirely by fixed deposits. Even as gross debt increased to Rs 930 crore in fiscal 2025 from Rs 455 crore in fiscal 2024, net debt declined to Rs 294 crore in fiscal 2025, compared with Rs 372 crore in fiscal 2024 owing to the entirety of GML backed by fixed deposits.

 

The ratings continue to reflect the established market position of the PNG group in the jewellery retail sector. PNG is currently the second largest organised jeweller in Maharashtra. These strengths are partially offset by geographical concentration in revenue, intense competition and regulatory changes in the gold jewellery segment.

Analytical Approach

Crisil Ratings has also combined the business and financial risk profiles of PNG and its subsidiaries, as it has operational and financial linkages. With adoption of Ind AS 116 with effect from April 1, 2019, lease liabilities are being treated as debt while related adjustments are made in depreciation and amortisation and interest cost components.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

• Established market position with strong brand and experienced management: The PNG group is an established player in the gold, silver and diamond jewellery business with a significant presence in Pune, Mumbai and other parts of Maharashtra. It was started in 1832 in Sangli by Mr Ganesh Narayan Gadgil; Mr Purushottam Narayan Gadgil expanded the brand to Pune in 1958. Mr Saurabh Gadgil, Chairman and Managing Director, has experience of more than two decades in the gold jewellery business. PNG currently operates 55 retail outlets in India including 2 lifestyle stores caters to lightweight Jewellery and one store in the US as of June 30, 2025. Also, PNG plans to diversify its regional presence by adding stores in Madhya Pradesh, Uttar Pradesh and Bihar. It recently opened a store in Indore in August 2025. Apart from geographical diversification, PNG is also adding lifestyle stores in lightweight jewellery segment. These are expected to support the improving business profile of the company.

 

• Improving operating efficiency: PNG’s operating efficiency has been steadily improving, supported by higher scale and prudent cost management.  In fiscal 2025, gross margin improved to 9.1% (vs 8.4% in fiscal 2024) owing to refinery sale being discontinued for H2FY25 whereas EBIDTA margin remained stable at 4.5% in fiscal 2025 owing to overhead expenses related to significant number of new store additions. Going forward, operating margins are expected to be in the range of 5-6% supported by the discontinuation of recording refinery sales, increasing scale with the maturing of new stores and gradually increasing studded share. Post the receipt of IPO proceeds, procurement via GML has increased which is completely backed by fixed deposit. Inventory days increased to 100 in fiscal 2025 owing to new store addition and readiness for festive and wedding demand. With the new stores opened in fiscal 2025 maturing over time the inventory turnover is expected to improve. The group has systematically exited loss-making operations over the years, including Style Quotient Jewellery Pvt Ltd (FY2018), joint venture Anant Mauli Jewellers (FY2019), Gadgil Diamonds Pvt Ltd (FY2018), and Middle East operations (FY2023).

 

• Healthy financial risk profile: The company’s financial risk profile also improved in fiscal 2025, supported by healthy operating performance and IPO proceeds of Rs 850 crore (related to fresh issue of shares). Adjusted gearing declined to 0.61x in fiscal 2025 compared to 0.91 in fiscal 2024 while interest coverage came in at 9.3x in fiscal 2025 compared to 5.9x in fiscal 2024.  A portion of IPO proceeds was utilized to repay long-term borrowing and high cost working capital borrowing while the company simultaneously availed gold metal loans (GML) (Rs 485 crore outstanding as on March 31, 2025) backed entirely by fixed deposits. Even as gross debt increased to Rs 930 crore in fiscal 2025 from Rs 455 crore in fiscal 2024 driven by new store openings, net debt declined to Rs 294 crore in fiscal 2025, compared with Rs 372 crore in fiscal 2024 owing to the entirety of GML backed by fixed deposits.

 

Weaknesses:

• Exposure to high geographical concentration: As of June 2025, of its 55 stores, PNG has 54 stores in Maharashtra and Goa leading to geographical concentration. However, this concentration risk is mitigated by the fact that PNG is one of the oldest and second largest retailers of gold, silver and diamond jewellery in Maharashtra. Its strong brand recognition especially in tier II and tier III cities throughout western India further supports growth. With store opened in August 2025, in Indore, Madhya Pradesh, company is expanding its footprint beyond Maharashtra. Going forward, company has plans to expand into cities across Madhya Pradesh, Uttar Pradesh, and Bihar. The performance of these stores outside Maharashtra will be a key monitorable.

 

• Susceptibility to regulatory risks in the jewellery industry: The jewellery sector has seen heightened regulatory action in the past. For instance, during fiscal 2014, to curb gold imports, the government introduced the 80:20 rule, discontinued the gold-on-lease scheme and modified the gold deposit scheme. Subsequently, in fiscal 2015, the gold-on-loan scheme was restarted and the 80:20 rule was scrapped. Demonetisation and imposition of 1% excise duty impacted growth in fiscal 2017. Furthermore, since January 2016, the government has mandated all jewellers to collect details of the permanent account number from customers for all purchases beyond Rs 2 lakh. The government has also introduced the sovereign gold bond scheme to shift consumer preferences away from physical gold. In fiscal 2023, the government hiked the import duty on gold from 7.5% to 12.5%. Some of these regulatory changes have moderated the company's operating performance in the past. Total custom duty on gold was lowered from 15% to 6% in the latest Union Budget in July 2024. Some of these regulatory changes have moderated operating performance in the past. Crisil Ratings believes that PNG will remain susceptible to changing regulatory norms.

 

• Intense competition in the jewellery segment: PNG is exposed to intense competition in the jewellery retailing segment. Jewellery retailing in India is largely dominated by unorganised players, which have a stronghold in their regions. Besides, organised players have also been expanding rapidly in select regions, posing stiff competition. As the company expands into newer geographies and cities, it will face severe competition from these local players. However, increasing consumer awareness about branded jewellery and purity of gold, implementation of hallmarking since June 2021 and the trust associated with the PNG brand (especially in Maharashtra) will enable the company to penetrate new markets and geographies over the medium term.

Liquidity: Adequate

The Company relies mainly on gold on loan facilities for funding needs. It alternates between using gold on loan or working capital bank limits, depending on the cost of funds and gold price movements. Gold metal loan is backed by 100% FD.  As a result, cash & cash equivalents including fixed deposit against GML were Rs 636 cr as on March 31, 2025. Liquidity is further supported by nil debt obligation and net cash accruals of more than Rs 300 crore. Bank limit utilisation averaged above 72% over the 12 months through June 2025.

Outlook: Positive

PNG will continue to benefit from its established market position, store expansion plans and improving operating efficiency over the medium term with comfortable financial risk profile.

Rating sensitivity factors

Upward factors:

• Sustained growth in revenues along with sustenance of operating margin of 5.5-6.5%.
• Efficient working capital management leading to sustained improvement in the financial risk profile and liquidity.

 

Downward factors:

• Decline in revenue or operating profitability below 4%, leading to lower-than-expected net cash accrual
• Large, debt-funded capex or stretched working capital cycle weakening the capital structure

About the Company

Established in 1832, PNG is one of the oldest retailers of gold, silver and diamond jewellery in Maharashtra. The company was set up as a proprietorship firm, PN Gadgil & Co, in 1958 and reconstituted as a partnership, PN Gadgil Jewellers. It was further reconstituted as a private limited company with effect from December 2013. As on April 5, 2023, the company has become a limited entity. It has 38 stores and one outlet in the US as of July 2024. In fiscal 2023, PNG closed its business in the UAE. The operations are managed by Mr Saurabh Gadgil and Mr Parag Gadgil.

 

The company got listed on the Indian stock exchange (NSE/BSE) on September 17, 2024. Post IPO, the promoters hold ~ 83% stake, while the rest (17%) is owned by the public.

Key Financial Indicators (consolidated): 

As on / for the period ended March 31*	Unit	2025	2024
Revenue	Rs crore	7699	6114
Profit after tax (PAT)	Rs crore	170	153
PAT margin	%	2.2	2.5
Adjusted debt/adjusted networth	Times	0.61	0.91
Interest coverage	Times	9.3	5.9

*Crisil Ratings-adjusted

Any other information: Not Applicable