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PNGS Gargi BSE SME IPO review (May apply)

Review By Dilip Davda on December 5, 2022

•    PNGSG is engaged in the business of costume and fashion jewellery.
•    The segment is highly competitive and fragmented.
•    The issue is priced attractively based on its last 18 months' earnings. 
•    The sustainability of such margins going forward raises concern. 
•    Well-informed/cash surplus-risk seekers may consider the investment.

PNGS Gargi Fashion Jewellery Ltd. (PNGSG) is engaged in the retail business of costume and fashion jewellery under the brand name "Gargi by P. N. Gadgil & Sons" launched in 2021 under the artificial jewellery segment. It deals in 92.5% certified sterling silver jewellery and brass jewellery, idols and other silverware and related gift items. The company offers a wide range of products from artificial jewellery segments for special occasions such as weddings and festivals to daily-wear jewellery for all ages, genders and across various price points.

Artificial jewellery is not only affordable, but it is also trendy too, giving the liberty to experiment with changing fashions and flaunt the latest styles. It also, at the same time, allows one to hold a collection which is classy and sophisticated. Another retail trend that has caught on recently is to buy everything, including jewellery, online to match outfits - something that is possible while buying artificial jewellery for the price points that it comes at, as against gold and precious stones like diamonds. 

In keeping with market-changing dynamics in the accessories space, PNGSG decided to enter into this new segment, offering a wide range of fashion jewellery that includes 92.5% sterling silver jewellery and brass jewellery, idols and other silverware and related gift items.

PNGSG primarily sources finished jewellery from third-party manufacturing vendors located across India. These products are mainly marketed using both online as well as offline marketing tools. The company operates through a shop-in-shop model and has entered into an agreement with P.N. Gadgil & Sons Limited and P. N. Gadgil Art & Culture Foundation to have a point of sales (POS) counters at its existing 30 showrooms across the states of Maharashtra, Gujarat and Karnataka. As of October 31, 2022, it has 23 employees on its payroll. 

To part finance its need for working capital (Rs. 5.50 cr.), and for general corporate purposes (Rs. 1.77 cr.), PNGSG is coming out with a maiden IPO of 2600000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 7.80 cr. The issue opens for subscription on December 08, 2022, and will close on December 13, 2022. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27% of the post-issue paid-up capital of the company. PNGSG is spending Rs. 0.53 cr. for this IPO process. 

Shreni Shares Pvt. Ltd. is the sole lead manager for this IPO, while Bigshare Services Pvt. Ltd. is the registrar of the issue. Shreni Shares Pvt. Ltd. is also the market maker for this company. 

Having issued initial equity shares at par, the company issued further equity shares at Rs. 30 per share in September 2022 and has also issued bonus shares in the ratio of 180 for 100 shares in the same month. The average cost of acquisition of shares by the promoters is Rs. 16.67 per share. 

Post issue, PNGSG's current paid-up equity capital of Rs. 7.03 cr. will stand enhanced to Rs. 9.63 cr. Based on the upper band of IPO pricing, the company is looking for a market cap of Rs. 28.88 cr. 

On the financial performance front, for the last three fiscals, PNGSG has posted a turnover/net profit of Rs. NIL / Rs. - (0.001) cr. (FY20), Rs. 0.01 cr. / Rs. 0.01 cr. (FY21), and Rs. 5.94 cr. / Rs. 1.11 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 2.13 cr. on a turnover of Rs. 11.89 cr. Thus the company has posted bumper performance for the last 18 months which appears as window dressing and raises concern over sustainability. 

For the last three fiscals, PNGSG has reported an average EPS of Rs. 197.73 and an average RoNW of 56.28 %. The issue is priced at a P/BV of 1.33 based on its NAV of Rs. 22.53 as of September 30, 2022, and at a P/BV of 2.39 based on its post-IPO NAV of Rs. 12.54 per share. 

If we annualize FY23 earnings and attribute it to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of around 6.77. Thus, on the basis of super profits reported, the issue appears lucratively priced, but whether will it maintain such margins going forward is a million-dollar question. 

PNGSG has not declared any dividends since incorporation. It will adopt a prudent dividend policy post-listing, based on its financial performance and future prospects. 

As per the offer document, PNGSG has no listed peers to compare with, which is raising eyebrows.

This is the 16th mandate from Shreni Shares in the last three fiscals. Out of the last 10 listings, all opened at premiums ranging from 2.45% to 101.18% on the day of listing.

Conclusion / Investment Strategy

PNGSG is operating in a highly competitive and fragmented segment. The sustainability of margins reported for the last 18 months raises concern. The issue is attractively priced on the basis of its recent super earnings but maintaining such performance going forward holds the key. Well-informed, cash surplus/risk seekers may consider investing in this IPO.

Review By Dilip Davda on December 5, 2022

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

PNGS Gargi Fashion Jewellery IPO FAQs

  1. 1. Why PNGS Gargi Fashion Jewellery IPO?

    The initial public offer (IPO) of PNGS Gargi Fashion Jewellery Limited offers an early investment opportunity in PNGS Gargi Fashion Jewellery Limited. A stock market investor can buy PNGS Gargi Fashion Jewellery IPO shares by applying in IPO before PNGS Gargi Fashion Jewellery Limited shares get listed at the stock exchanges. An investor could invest in PNGS Gargi Fashion Jewellery IPO for short term listing gain or a long term.

  2. 2. How is PNGS Gargi Fashion Jewellery IPO?

    Read the PNGS Gargi Fashion Jewellery IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. PNGS Gargi Fashion Jewellery IPO what should investors do?

    PNGS Gargi Fashion Jewellery IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the PNGS Gargi Fashion Jewellery IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is PNGS Gargi Fashion Jewellery IPO good?

    Our recommendation for PNGS Gargi Fashion Jewellery IPO is to subscribe for long term.

  5. 5. Is PNGS Gargi Fashion Jewellery IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the PNGS Gargi Fashion Jewellery IPO.

  6. 6. When will PNGS Gargi Fashion Jewellery IPO allotment status?

    The PNGS Gargi Fashion Jewellery IPO allotment status will be available on or around December 16, 2022. The allotted shares will be credited in demat account by December 20, 2022. Visit PNGS Gargi Fashion Jewellery IPO allotment status to check.

  7. 7. When will PNGS Gargi Fashion Jewellery IPO list?

    The PNGS Gargi Fashion Jewellery IPO will list on Tuesday, December 20, 2022, at BSE SME.