PNGS Reva Diamond Jewellery IPO

India is one of the world’s largest jewellery markets, driven by strong cultural demand, rising disposable incomes, and increasing preference for branded jewellery. According to the CARE Industry Report referenced in the RHP, the Indian gems and jewellery market is estimated to grow at a high single-digit CAGR over the medium term, with diamond jewellery outpacing overall jewellery growth due to premiumisation and younger demographics.

Key growth drivers include:

• Shift from unorganised to organised retail

• Rising trust in hallmarking and certification

• Expansion of organised retail in Tier II and Tier III cities

PNGS Reva Diamond Jewellery Limited operates a retail-led business model, selling diamond-studded jewellery through:

• One company-owned exclusive brand store

• Multiple shop-in-shop formats within P. N. Gadgil & Sons stores

The company designs, sources, and retails jewellery, while leveraging promoter infrastructure through franchise and facility agreements.

The company operates under multiple regulatory frameworks, including:

• Companies Act, 2013

• SEBI ICDR Regulations, 2018

• BIS Hallmarking regulations

• GST laws

• Income-tax Act, 1961

• FEMA and FDI policy (for foreign investors)

Key risks highlighted in the RHP include:

• Dependence on promoter group infrastructure

• Volatility in gold and diamond prices

• Inventory management risks

• Regulatory and compliance risks

• High working capital requirements

The promoters are:

• P. N. Gadgil & Sons Limited (Corporate Promoter)

• Govind Vishwanath Gadgil

• Renu Govind Gadgil

The promoter group brings over 190 years of legacy in the jewellery business, providing strong brand recall and operational expertise.

The primary group entity is P. N. Gadgil & Sons Limited, which operates gold and silver jewellery retail stores. PNGS Reva Diamond Jewellery Limited operates independently but leverages group infrastructure through contractual arrangements.

• Govind Vishwanath Gadgil – Chairman (Non-Executive)

• Amit Yeshwant Modak – Whole-time Director & CEO

• Kisan Maruti Shendkar – Chief Financial Officer

• Kirti Suryakant Vaidya – Company Secretary & Compliance Officer

The company has constituted statutory committees including:

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholders’ Relationship Committee

• IPO Committee

These committees ensure compliance with SEBI and Companies Act governance norms.

As per the RHP, there are no material litigations that could adversely impact the company’s operations or financial position.

Key approvals include:

• Certificate of Incorporation

• GST Registration

• BIS jewellery certifications

• Shop & Establishment registrations

As of September 30, 2025, total borrowings stood at ₹1,302.49 million, primarily comprising working capital facilities.

PNGS Reva Diamond Jewellery Limited follows a working-capital-intensive retail model, typical of organised diamond jewellery businesses. The company’s cash flows are primarily driven by operating profitability, inventory build-up, and financing through borrowings, especially after the diamond business transfer from the promoter group.

1. Cash Flow from Operating Activities (CFO)

Core Characteristics

• Operating cash flows are largely linked to:

  • Sale of diamond-studded jewellery

  • Inventory rotation

  • Advances received from customers

• The business operates on a low receivable cycle, as most sales are retail and realised at the point of sale.

Key Drivers of Operating Cash Flow

• Profit before tax

• Non-cash adjustments (depreciation, lease accounting)

• Working capital movements, especially inventory and trade payables

Operating Cash Flow Dynamics

• Inventory constitutes the largest current asset, accounting for over 85% of current assets

• Increase in inventory leads to temporary cash absorption

• Trade payables partially offset inventory funding needs

Inventory Position (₹ million)

Interpretation:
The sharp increase in inventory in H1 FY26 reflects:

• Stock build-up post business transfer

• Preparation for store expansion

• Wider product assortment under the Reva brand

This inventory expansion temporarily suppresses operating cash flow, but is strategic in nature rather than operational stress.

2. Cash Flow from Investing Activities (CFI)

Nature of Investing Cash Flows

The company’s investing cash flows are relatively moderate, as PNGS Reva:

• Does not operate large manufacturing facilities

• Does not incur heavy capital expenditure on plant or machinery

Major Uses of Investing Cash

• Store interiors and fixtures

• Leasehold improvements

• IT systems and billing infrastructure

• Security deposits for leased retail locations

The company follows an asset-light retail expansion strategy, which keeps investing cash outflows controlled.

3. Cash Flow from Financing Activities (CFF)

Primary Source of Funding

• Working capital borrowings from banks

• Short-term credit facilities

• Lease liabilities under Ind AS 116

Borrowings Position (₹ million)

Interpretation:

• Borrowings increased significantly post conversion into a company and transfer of diamond business

• Funds are mainly used for:

  • Inventory financing

  • Store roll-out

  • Day-to-day working capital

The company confirms in the RHP that:

Borrowed funds have been utilized for the purpose for which they were obtained and as per sanction terms.

4. Net Cash Position and Liquidity

Cash & Cash Equivalents (₹ million)

Interpretation:

• FY25 shows a spike due to financing inflows and restructuring effects

• Cash reduced in H1 FY26 due to:

  • Inventory accumulation

  • Business expansion

• Liquidity remains adequate given:

  • Strong operating margins

  • Bank funding access

  • Promoter backing

5. Overall Cash Flow Assessment

Strengths

• Strong operating profitability

• Retail-led cash collections

• Limited receivable risk

• Asset-light expansion model

Pressure Points

• High inventory intensity

• Dependence on working capital borrowings

• Cash flow sensitivity to gold and diamond price volatility

Management Outlook

Post IPO, management expects:

• Improved liquidity through equity infusion

• Reduced reliance on debt for working capital

• Better cash conversion cycle as inventory turnover stabilizes

Management focuses on:

• Expanding exclusive brand stores

• Improving inventory turnover

• Strengthening brand positioning in diamond jewellery

IPO proceeds will be used for:

• Setting up new brand-exclusive stores

• Working capital requirements

• General corporate purposes

The issue price is determined based on:

• Earnings per share

• Peer valuation multiples

• Growth prospects

The IPO is a 100% fresh issue, resulting in dilution of promoter shareholding.

• Business Transfer Agreement

• Franchise Agreement

• Space Facility Agreement

Shareholders are entitled to voting rights, dividends, and residual claims on assets.

All disclosures are made in compliance with SEBI ICDR Regulations and Companies Act, 2013.

Compliance Highlights

PNGS Reva Diamond Jewellery Limited complies with:

• SEBI ICDR Regulations, 2018

• Companies Act, 2013

• Listing Obligations and Disclosure Requirements (LODR)

• FEMA and FDI policy (where applicable)

Key Disclosures Included in RHP

• Risk factors

• Capital structure

• Financial indebtedness

• Material contracts

• Monitoring agency appointment

• Promoter lock-in

• Eligibility under Regulation 6(2) of SEBI ICDR

Monitoring of IPO Proceeds

• A SEBI-registered Monitoring Agency will track usage of IPO funds

• Periodic reports will be submitted to stock exchanges

Structure After the IPO

PNGS Reva Diamond Jewellery Limited’s IPO is a 100% fresh issue, which means no existing shareholder is selling shares. As a result, the promoter shareholding will dilute, while new public shareholders will be inducted.

Post listing, the shareholding will broadly comprise:

• Promoters and promoter group

• Qualified Institutional Buyers (QIBs)

• Non-Institutional Investors (NIIs)

• Retail Individual Investors (RIIs)

• Eligible employees (if applicable)

Allocation as per SEBI ICDR Regulations

Important:

• Up to 60% of the QIB portion may be allocated to Anchor Investors

• Promoters are subject to lock-in requirements under SEBI ICDR Regulations

Post-IPO Ownership Nature

• Promoters will remain controlling shareholders

• Public float will increase significantly, enhancing liquidity

• Institutional ownership is expected to bring better governance oversight

Policy Framework

PNGS Reva Diamond Jewellery Limited has adopted a formal Dividend Distribution Policy, as required under SEBI regulations. The policy aims to strike a balance between:

• Rewarding shareholders

• Reinvesting profits for growth

Key Principles of the Dividend Policy

The declaration of dividends depends on:

• Profitability and retained earnings

• Cash flow position

• Capital expenditure requirements

• Working capital needs

• Debt repayment obligations

• Economic and business conditions

Practical Implications for Investors

• The company operates in a growth phase, particularly store expansion

• Dividend payouts may be moderate or conservative in the near term

• Retained earnings are expected to be reinvested into:

  • Inventory

  • Store rollout

  • Brand building

Investor takeaway:
Dividend income should be viewed as supplementary, with returns primarily driven by business growth and valuation re-rating.

Nature of Related Parties

Related parties primarily include:

• Corporate Promoter: P. N. Gadgil & Sons Limited

• Promoter group entities

• Key managerial personnel and their relatives

Key Related Party Arrangements

Governance Safeguards

• Transactions are conducted on an arm’s length basis

• Approved by:

  • Audit Committee

  • Board of Directors

• Fully disclosed in the RHP and financial statements

These arrangements allow PNGS Reva to operate efficiently while remaining asset-light, without compromising independence.

Capital Gains Tax (Indicative)

Dividend Taxation

• Dividends are taxable in the hands of shareholders

• Taxed at applicable slab rates

• TDS applies as per Income-tax Act provisions

Note:
Tax laws are subject to change. Investors should consult tax advisors for personalized advice.

Issue Type

• 100% Book-Built Issue

• Fresh Issue only

• No Offer for Sale (OFS)

Issue Size

• Aggregate issue size: ₹3,800 million (₹380 crore)

Investor Categories & Reservation

Application Mechanism

• ASBA mandatory for all except Anchor Investors

• UPI-based applications for retail and eligible NIIs