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Growth trend persists; store expansion picks up in 2HFY27

* PN Gadgil Jewellers (PNG) reported 41% YoY consolidated revenue growth to INR24.1b (vs. est. INR24.1b) in 1QFY27. Retail revenue grew 56% YoY with 46% SSSG. Franchisee and e-commerce revenues increased 8% and 20%, respectively. Customer footfalls rose 26% with a healthy 92% conversion rate. Wedding demand shifted to 2Q and 3Q due to adhik mass.

* PNG added no stores during the quarter, and total store count stood at 78 (48 COCO, 17 FOCO, and 13 LiteStyle) across 36 cities. The company reiterated its FY27 target of 25 store additions, with a higher contribution from franchise-led stores, which are expected to open in 2HFY27. Over the medium term, PNG targets 140 stores by FY28 and 177 stores by FY29. Strong customer response in Uttar Pradesh has prompted plans to add 8– 10 franchise stores in the state during FY27.

* Adjusted for the INR97m inventory gains on unhedged gold, gross margin expanded 30bp YoY to 12.8% (vs. est. 12.5%). Studded jewelry mix improved to 10.9% (vs. 10.0% in 1QFY26), while newly opened stores in Uttar Pradesh and Central India reported a higher 15–18% studded mix. Other expenses rose by ~5% due to cost-control efficiencies. EBITDA margin expanded 130bp YoY to 7.2% (est. 6.5%). Management retained its FY27 PAT margin guidance of ~4%. We model a PAT margin of ~4% for FY27/FY28.

* We model a revenue, EBITDA, and APAT CAGR of 19%, 25%, and 20% over FY26-28E, respectively. PNG continues to focus on increasing the old-gold contribution to ~50% (from ~40%) through its Suvarna Swarajya initiative. It has increased hedge coverage to ~70%, targeting 80%+ in the near term and ~100% over time. Given the ongoing strategic initiatives and long-term growth visibility, we reiterate our BUY rating with a TP of INR825.

Beat on operating performance; SSSG up 46%

* SSSG up 46%: Consolidated sales rose 41% YoY to INR24.1b (est. INR24.1b) in 1QFY27. The retail segment (78% of total sales) recorded robust revenue growth of 56% to INR18.9b. The company recorded 80% YoY revenue growth on Akshay Tritiya to reach INR2,514m. SSSG for the quarter stood at 46%. Gold reported value growth of 54% while volume is broadly stable. Silver delivered 131% YoY growth in value while volume declined 7% YoY. Diamond posted a value/volume growth of 29%/26% YoY.

* Expansion in margins: Gross margin expanded 30bp YoY to 12.8% (vs. est. 12.5%; 9.7% in 4QFY26). GP is adjusted to an inventory gain of INR97m on unhedged inventory. Employee expenses up 50% YoY and other expenses up 5% YoY. EBITDA up 73% YoY to INR1.7b (est. INR1.6b). EBITDA margin expanded 130bp YoY to 7.2% (est. 6.5%, 3.8% in 4QFY26).

* APAT grew 61% YoY to INR956m (est. INR941m). PAT margin came in at 4% (est. 3.9%) for the quarter.

Valuation and view

* We increase our EPS estimates by 8-10% for FY27 and FY28, driven by better operating performance.

* We model revenue, EBITDA, and APAT CAGR of 19%, 25%, and 20% over FY26– 28E, respectively. PNG continues to focus on increasing the old-gold contribution to ~50% (from ~40%) through its Suvarna Swarajya initiative. The company has increased hedge coverage to ~70%, targeting 80%+ in the near term and ~100% over time. Given the ongoing strategic initiatives and long-term growth visibility, we reiterate our BUY rating on the stock with a TP of INR825

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