Point taken ,will be Cautious with the content
I don’t think the share buyback offer increases the confidence in management. There still seem to be undisclosed risks or issues for the future of the company.
Interest costs also seem to be key here:
The company surprisingly has paid an interest of Rs 282 crore for FY17 for a loan outstanding of Rs 802 crore as of March 2017.
Still not able to figure out from where this negativity came in this counter. Vakrangee ?? promoters gift ?? … before all these events every thing was smooth…results good … growth excellent…gave bonus recently. Now what ?? Senior border please throw some light on this. As retailers are still confused. Those who have purchased on higher price and also those who want to average their higher buying. Few of boarders believes that unlike vakrangee , Pcj is not manipulating books of accounts. Then here unable to find any reason for such big movement. Now when board decided for BUYBACK @350. . even now few thinks this is not going to help. Even share price didn’t take any buyback effect. Too much volatility in PCJ and also in investors BRAIN.
Sameer - In my limited understanding, there have been red flags in PCJ all along. Till the stock rises, things are all fine and ignored, but once market gets a whiff of some wrongdoings, such stocks do not recover. Look at Vakrangee, Treehouse. So many examples! There is no way any good stock could loose 75% of its market cap this quickly just on rumors. Exceptions are always there but why would you like to take a chance? This is as good as gambling on horses or playing in casino!
Buyback might happen or not, who knows; but think what would be the acceptance ratio. 25% even if we assume retail quota of 15% and not everyone submitting their shares? So what happens to the rest of the shares that are not accepted.
Another possibility is that this buyback might be an eyewash in order to give ‘easy’ exit to some until the time actual buyback materializes. Many are going to exit through open market.
I do not understand the urge to gamble? Human desire to make quick money leads to disasters. Evaluate downside before making any investment. Just looking at upside without considering what is at risk will kick one out of the market soon.
Just give a thought of the price action in last 2 months here in this stock. Is this normal?
Also, if one checks number of individual shareholders holding below 2 lac in Dec and March
Individual share capital upto Rs. 2 Lacs for December 17
29578 holders 4836182 48,36,182 1.23%
Individual share capital upto Rs. 2 Lacs for March 18
67236 holders 9125066 91,25,066 2.31%
My hunch is this retail holding percentage will increase much more in June shareholding report.
NO CAPITAL, NO CAPITAL MARKET!
I will share a major concern here.It is very difficult to believe now that vakrangee’s books are not cooked.Given the shady nature of the jewellery biz with frauds like gitanjali gems,winsome diamonds,when vakrangee buys stake in this company(out of all the possible stocks in the market),things become suspicious.
Again i maybe totally wrong and pc may be a good company after all.However these red flags have to be answered for the faith to be restored in the company.
At today’s price, PCJ market cap is Rs.7,000 crores. The buyback quantum is 424 crores, i.e. 7%. The non promoter holding is 42%. Hence, as a non promoter, the proportion of shares that will get bought back is ~17% at 350/share. So, if bought 100 shares at 170/share (yesterday) and tendered 17 shares at 350/share. Then the implied acquisition price per share is 133/share. Implying a market cap of Rs4740 crores (post buyback). This is 0.6x reported FY17 sales and 11x FY17 PAT. The real question hence is, EVEN IF there is an issue, the question is how much!!
Are you saying post buyback stock will fall to 4770 crores (133 rs per share) market cap from 7000 crore market cap. What I understood is you are not talking the profit that you have got by selling 17 shares in buyback and decreasing the cost of remaining shares owned. But that does not mean , market cap/share price will fall to 4740 crores / 133 rs per share (just because of buyback.). Let me know if I misunderstood anything
I am saying that 133/share is the implied purchasing price for 1 share post buyback and hence implied market cap is 4740 crores. The math is (100170-17350)/83=133/share. (assuming 17% acceptance as detailed in earlier comment).
Also, if boarders can highlight in all previous cases of scams/governance issue, if any management has ever come forward with a Cash Buyback OR Dividend that the promoter said he wouldn’t participate in! I am just wondering if we are undermining the actions/facts for fears of unknown.
The math is (100 multiply 170 minus 17 multiply 350) divided by 83 shares = 133/share
Buyback size is around 3 percent of the outstanding shares. Calculation needs to be revised.
Just see the way mutual funds have aggressively bought PCJ in April 18. There holding has increased 3X !. While retail guys like us have been panicking and selling our holdings at a loss - MF have been buying it. Writing on the wall appears to be very clear now.
where can we find the above data. Please share us the source of the info
Most of them have arbitrage in their fund names i.e. just short term bet for them.
This one from valueresearchonline.com gives you overall picture. https://www.valueresearchonline.com/funds/comres.asp but won’t give you month wise.
Arbitrage schemes may have bought the stock in spot and sold it in future market for a small spread. So there is no risk for them if price goes down as future contract will be enforced.
If promoters have not increased their stake after such a massive fall , why anybody else should invest in the company?
Promoters are increasing stake by not participating in buyback.
That’s true. But it is company’s money being used for buyback. I guess promoters are wealthy enough to have bought some shares on their own. The whole episode shows lack of confidence in promoters.
In the PCJ Board meeting of May 10, they have announced the quantum and the price of the buy back. However, is there a time line within which the company has to complete the buy back process? Also, can the buy back offer be “withdrawn”? Would be great if someone can share SEBI guidelines ( I am assuming there would be some) for his area. Thx
Source of MF data: https://www.rupeevest.com/Mutual-Fund-Holdings/223032