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.
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
Date is shown as 25/5 ! Typo or have capability to predict a month in advance!
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.
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 …
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.
PC Jewellers cancels buyback
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?
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.
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.
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.
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 ?!
Completely agree. Have experienced this in Kwality, Lasa and Kesoram. We should protect our capital by staying away from such ‘bhangar cap’ stocks.
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.
Have you done any analysis in all companies before comparing PCJ with Vakarangee & Kwality. Kwality has huge debt, will not survive. Vakarangee had market cap of 55000 cr, overhyped business model. PCJ is different case, management came up with buyback offer to salvage price in pressure of zee media. Credit ratings were downgraded by Crisil & care due to this cash going out from company. No need for buyback. It’s good decision, timing is wrong, management is not matured enough on process however they are masters in their field. Current price is discounting forward PE at 5, Sales to Market cap is close to 2, zero pledge. It will rebound soon.
I need not to analyse and waste my energy when there are so many negatives. Also, there are so many good companies available at PE-5-10 dur to recent carnage in mid cap/small cap. Is it worth analysing when management itself acting irresponsibly/taking decision in haste to salvage the stock price? Sometimes, we get biased due to vested interest & even when things are crystal clear, we try to come out with one or other reasoning. We all are human beings and can mistake. Better to accept the mistake and move on when there is ample of opportunities… Best of Luck!
I think we need to bring this evil practice to the notice of SEBI and suggesting that any buy back/cancellation to be announced with the approval of sebi and cancellation should invite action if the reasons for cancellation r not adequate/appropriate.
Your calculations are based on books of accounts known publically but how authentic they are.Imo the books are cooked and issue with vakrangee was adjustment of black money routed thru so called export of goods.
Can we move joint complaint against the PC Jewellers?
I think separate multiple complaints on buy back and subsequent cancellation would b more effective.senior boarders may Pl give their views