Motilal Oswal has issued a BUY recommendation on P N Gadgil Jewellers (PNGJL), setting a target price of Rs 825, which implies a robust 37% upside from the current market price of Rs 604. The research highlights PNGJL’s aggressive retail expansion, innovative LiteStyle format targeting younger consumers, and resilient operational performance despite recent gold price volatility. While the first quarter of FY26 saw muted demand due to a sharp gold price surge, management anticipates a strong recovery as festival season approaches. The company’s prudent financial management, improving product mix, and strategic foray into new geographies underpin its positive outlook. Investors are advised to monitor PNGJL’s execution in new markets and the continued ramp-up of its high-margin formats.

Motilal Oswal Maintains BUY Call: Rs 825 Target for P N Gadgil Jewellers

Motilal Oswal has reiterated its BUY recommendation on PNGJL, valuing the stock at 30x Mar’27E EPS and setting a target price of Rs 825, representing a 37% potential upside from current levels. The brokerage’s conviction is anchored in the company’s ambitious store rollout, margin expansion prospects, and strategic initiatives to capture emerging consumer segments.

Muted Demand in 1QFY26 Amidst Gold Price Volatility

Jewelry demand was subdued in the first quarter of FY26, largely due to a dramatic 30-35% year-on-year surge in gold prices, which breached the Rs 100,000 mark per 10 grams in the retail market. This sharp escalation, driven by geopolitical tensions, prompted consumers to defer purchases in anticipation of price stabilization. The impact was particularly pronounced in June 2025, with discretionary shopping postponed and old gold exchange transactions dominating sales. However, the studded and polki jewelry segments remained resilient, buoyed by stable diamond prices and sustained interest in value-added pieces. Management expects demand to rebound in the second quarter, supported by key festivals such as Raksha Bandhan and Ganesh Chaturthi.

Retail Expansion: Store Network to Surge Beyond Maharashtra

PNGJL plans to open 22-25 new stores in FY26, including eight company-owned PNG stores and 12-13 LiteStyle outlets, with a focus on both deepening its Maharashtra presence and entering new states such as Uttar Pradesh, Madhya Pradesh, and Bihar. The company currently operates 53 stores, comprising 40 company-owned, 12 franchisee-run, and one international outlet in the US. Notably, flagship launches are planned for Dadar (Mumbai), Lucknow, Kanpur, Indore, Patna, and Muzaffarpur, marking PNGJL’s foray into new geographies. The calibrated expansion strategy is designed to enhance brand visibility, unlock new markets, and drive long-term shareholder value.

LiteStyle Format: Capturing the Gen Z and Millennial Opportunity

PNGJL’s LiteStyle format is a strategic initiative targeting younger, design-conscious consumers with lightweight, fashion-forward jewelry at accessible price points. These smaller stores (1,500-2,000 sq. ft.) emphasize 14-carat and 18-carat gold, curated for impulse buying and modern tastes. The model, which expects to achieve breakeven within 12-15 months, boasts higher gross margins (15-16%) and leverages omnichannel capabilities to maximize reach. The first two LiteStyle stores were launched in Pune in 1QFY26, underscoring the company’s commitment to portfolio modernization and demographic diversification.

Financial Performance: Robust Growth Trajectory and Margin Expansion

PNGJL is projected to deliver a 22% CAGR in sales, 30% CAGR in EBITDA, and 26% CAGR in adjusted PAT over FY25-27E, with EBITDA margins set to expand to 5.1%-5.2%. The company’s focus on increasing the contribution of studded jewelry (now at 8%) and scaling the LiteStyle format is expected to drive further margin improvement. The legacy stores posted 25% revenue growth in FY25, while new stores are projected to add Rs 15-16 billion in FY26 as they mature. Franchisee and e-commerce channels are also forecast to grow at 45% and 35%, respectively. The discontinuation of refinery sales to vendors has temporarily dampened reported revenue growth, but the underlying retail momentum remains strong.

Balance Sheet Strength and Capital Efficiency

PNGJL has fortified its balance sheet by repaying Rs 3 billion in debt from IPO proceeds and implementing a comprehensive gold metal loan hedging strategy, with 100% coverage as of March 2025. This prudent financial management is expected to lower interest costs and enhance profitability. The company’s debt/equity ratio is projected to improve from 0.5 in FY25 to 0.4 in FY27, while return on equity (RoE) and return on invested capital (RoIC) are forecast at 18.4% and 17.4%, respectively, by FY27.

Key Financial Metrics and Valuation Table

Stock Levels and Targets for Investors

Current Market Price (CMP): Rs 604

Target Price (TP): Rs 825

Upside Potential: +37%

Key Support Levels: Rs 474 (52-week low)

Key Resistance Levels: Rs 848 (52-week high)

Motilal Oswal’s analysis suggests that investors with a medium- to long-term horizon should consider accumulating PNGJL at current levels, with the expectation of sustained earnings growth, margin expansion, and successful execution of its retail strategy.

Execution and Expansion are Critical to Re-rating

PNGJL’s investment thesis is underpinned by its aggressive expansion, innovative retail formats, and disciplined capital management. While near-term demand headwinds persist due to elevated gold prices, the company’s strategic positioning and operational agility are expected to drive a strong recovery in the coming quarters. Investors are encouraged to monitor the company’s progress in new markets and the performance of its LiteStyle format, as these will be pivotal in unlocking further value and achieving the stated price target.