PC Jeweller glitters as board advances share buyback date

PC Jeweller, India's second-largest listed jewellery retailer, share price more than doubled in the last three trading sessions after the board of directors plans to meet on May 10 to decided share buyback details.

  PC Jewellers, after retracing 68% from its highs of Rs 600.65 (compared to Monday's open of Rs 192.10), caught investors eye seeking bargain buying opportunity. The jewellery makers' market capital stands at Rs 94.92 billion.

  Strong financial growth and an attractive valuation in the form of trailing price-earnings (P/E) multiple of 12 compared with 40 at its peak level which scared away investors.

  Healthy balance sheet with cash and equivalents exceeding debt is also seen a positive for the company. It had a total debt of nearly Rs 7 billion in FY17, mostly short term and cash and equivalents of Rs 12 billion.

  Shares rebounded more than double from its 52-low of Rs 95.44 when compared to Monday's open of Rs 192.10 after it said to convene a board meet for share-buyback. The planned buyback is expected to help regain the trust of investors.

  PC Jeweller share price dipped to new low on reports of CBI arresting owner and conducting raids at its premises. However, the jewellery maker denied such connections.

  Further, on speculation of PC Jewellers' promoters holding information on a business relationship with e-governance service provider Vakrangee, a company, which according to reports came under SEBI's scanner for alleged price and volume manipulations of its own stock on BSE and NSE. The news sobered investor sentiment.

  The jewellery maker clarified that it is making the requisite disclosures in this regard from time to time, regarding the promoter Padam Chand Gupta gifting some of his shares to his family member through off-market transactions.

  Other negative triggers for the shares to fall in 2018 are the negative sentiment emerging from Punjab National Bank fraud involving jewellery firms Nirav Modi and Gitanjali Gems.

  Meanwhile, between April 20 and 30, funds managed by Fidelity International cut their holdings in PC Jeweller by 6.02% points.

  Promoters holding have seen a slide by more than 8% in FY18. The holding of promoters which stood at 68.41% by end of June 2017 dropped to 60.50% by December 2017 and further to 60.24% by end of March 2018, NSE data showed.

  Last week, the stocks declined for 8-day in a row, plunging 62.56% to Rs 110.65 on May 2, from Rs 295.50 on April 20.

  However, PC Jeweller assured that "our investors, shareholders and other stakeholders that there is nothing wrong with the company and its operations, the fundamentals of the company remain strong and it continues to move ahead on growth path".

  Meanwhile, the company is under F&O ban period, where investors cannot initiate fresh derivative positions, but can only square off existing positions.