PC Jewellers


(xaxa33) #540

That is exactly what I had said- “the record date should hopefully be soon thereafter”. I never said Buyback date


(Susindar) #541

Hi fellow boarders. Is this a good time to enter with all risks priced in?

Any buy back could further reduce purchase price to Rs110 assuming 10% acceptance ratio. Many of its competitors are knocked out such as Gitanjali, Nirav Modi and a number of regional players. There is a definite brand perception with gold jewels for purity and for PC Jewels this will only grow with its size and network effect. There is also GST effect and move to organized which could benefit listed players.

This is the only competitor to Titan at present.

My trigger for rerating will be:
1)a marked improvement in ROE
2) zero export sales as I have a feeling exports are just a means to launder money considering entities with high exports have always been shady like shree Ganesh and gitanjali

My current concerns with the stock in addition to the obvious CG issues are

  1. consistently reducing ROE every year
  2. reducing inventory turnover
  3. increasing debt
  4. reducing promoter holding
  5. high cash cycle of 150 days as compared to titan of just 50 days.
  6. some shady directors on board with no relevant expertise

The biggest risk I see here is the risk of fraud as the gold is taken on lease. They can easily sell the gold and pay 3% as interest every year for gold that they do not have. Only way this can be confirmed is by auditors doing a thorough job. So we have to have a lot of faith on the auditors.

Is anyone ready to risk an exposure at this low price? Why and why not?


(ashish) #542

Gold metal loan works in the manner as stated in one of the TBZ investor presentation:

As per this if they are running the shop and selling gold jewellery then they wont be able to take on new gold to sell to customer unless the old gold payments have been done. So selling gold, dont payback the bank and keep paying 3% interest doesn’t seem to be feasible.

Disclosure: not invested neither interested.


(Susindar) #543

Thanks for the useful info. It seems any gold that is remaining after the contract period needs to be purchased. So the company can’t pay only the interest and keep extending the lease.


(RedEPS) #546

Ratings update by CARE: http://www.careratings.com/upload/CompanyFiles/PR/PC%20Jeweller%20Limited-07-09-2018.pdf


(manivannan.g) #547

Company posted some updates on Q1 performance.


(Growth_without Debt) #548

Outlook: Negative
The outlook is ‘Negative’ on expectation of the liquidity pressure to continue which gets compounded with company’s
announcement of share buy back. The rating maybe revised downwards if the working capital requirement together with
the buy back plan put additional stress on the liquidity position. However, the outlook may be revised to stable in case
the company is able to ramp up its retail expansion primarily through franchisee route thereby, reducing overall reliance
on debt leading to an overall improvement in liquidity.


(Rohit) #549

It seems like they wants to spread some good positive information in the market to support the prices. That is the reason they have given this update. Because after buy back announcement also stock again reached at 130 levels from 230-240. Lets see if the buyback actually happens or not and when. hope they will not make some excuse and cancel it later like Vakrangee.

Disc : Invested


(Vijay) #550

Date is shown as 25/5 ! Typo or have capability to predict a month in advance!


(LTInvestor) #551

The total buyback number is 1.21cr. With 15.67cr shares o/s with the public, if you tender all your shares 8% will the accepted. If you buy 1000 shares at Rs. 130 and you tender 80 shares at 350, your average price will be 110.

Assuming a 550cr profit and 38.22cr o/s shares after buyback, your purchase PE will be 7.7x. I think for a company with no promoter pledging, no debt (if they stick to their word), this is cheap PE.

Way back in the crazy days of Sept 2013 (twin deficit crisis), I remember it was trading at 4x PE at Rs. 96 (48 adjusted). So not that cheap, but really good deal at 7.7x PE.


(ranviraaj) #552

I think , students of Benjamin Graham like Waltor Schloss would buy it at around 70-80 , a net-net they say…so the downward risk is limited to 70-80…being extremly conservative net asset value, price going below is possible but would not remain for longer time…on those level…of course if the balance sheet is not coocked up…
Dislosure : Invested …


(SBT) #553

Possibly market is strongly sensing a case of Earnings management - an active manipulation of earnings towards a predetermined target. The above letter is pointing strongly towards this possibility.
TITAN’s earnings will be a lead indicator of what happened in the industry during the last quarter. We will have to compare the growth reported by PCJ to that by TITAN.


(aravindms1us) #554

PC Jewellers cancels buyback


(ranviraaj) #555

How come bankers decide if the Board can use the money for buyback or no? Isn’t it,its shareholders money that is used for buyback? Will companies like TCS/Infosys also get NOC from Bankers for buyback?


(Rohit) #556

I was having v strong gut feeling that they will cancel the buyback. And it happened. Now dont know how the market will react to such news. I have learned an important lesson in last 2-3 months , if the company is having any corporate governance issues , stay away , no matter how much cheap business looks. :frowning:


(VALUE2017) #557

The Bankers have the right to refuse buy back as per their terms and conditions of sanctioned credit facilities. But the promoters should have taken NOC from Bankers in advance before declaring any buy back. Now again series of lower circuits and retail investors who had invested at recent lows will pay the price and will learn a harsh lesson from the market.


#558

No stakes here but this is a clear case of stock price management. Who knows they would want to give exit to some fellows stuck here. The problem is that these accidents will further compound problem of bad sentiment towards mid and small caps. Long back even before its IPO one senior investor from Kolkata had warned me about shady character of the promoters. I felt he was acting smart after its IPO and very successful run on the stock market untill recently. I realise the value of the wisdom now - stay out of the stock even in the slightest of doubt. Also pls remember that large proportion of gems and jwellery industry is well known for money laundering. This is true for more than 100 yrs and will remain so. Titan is an expensive stock not without reasons.


(manivannan.g) #559

If the promoters want to escape, they’ll find a way to do it, no matter how silly it is. Market clearly knows that this buyback is a dubious announcement, as anticipated such premium buyback (2x from current price) never gonna happen, thus stock is beaten further.

Why the bankers decline NOC ? If the promoters honestly intended to buyback, they would’ve disclosed the reasons for the same. Withdrawing the buyback citing this as a reason sounds very dubious. Now expect for more cockroaches to comeout out of the kitchen. Next, cooked balanced sheets ?!


(narenarora) #560

Completely agree. Have experienced this in Kwality, Lasa and Kesoram. We should protect our capital by staying away from such ‘bhangar cap’ stocks.


(cool_gaurav) #561

Clear case of poor corporate governance/management intention to artificially boost price for few days/month to provide exit to big investors. Lesson for everyone, if any co. announce buy back immediately after any fiasco then it is done to mange the price and trap retail investors. Recent examples- 1. Vakrangee 2. Kwality 3. PC Jewellers. Sad part is that people even after knowing that buy back being cancelled by Vakrangee/ Kwality still believed in PC story & now will have to pay heavy price.