PC Jeweller jumps 20% after clients take huge F&O positions
PC Jeweller jumps 20% after clients take huge F&O positions
Clarification asked by Nse
Looks like my observation on pledged shares were on cue. Without any pledged shares, the cash on books looks genuine which in effect means sales were true, hence EPS of Rs. 13 stands. Stock trades at 6x PE. Good buy + plus stock allows you to protect using puts. One of the best asymmetric bets in the market currently.
And the reply from PCJ to NSE, in response to the clarifications sought.
Thanks for sharing the reply. Henceforth, this stock (like most other things these days) will be subject more to faith than confidence. If the bankers would have objected on day 1 still the promoters would have hidden it and continued to plead with the bankers till the time was appropriate for them to declare that bankers are saying no. I am invested around 121 (adjusted for trading profits) and looking for an exit even at a small loss. I do not want to invest in a company where I have to continuously look over my shoulder. I will let go of the very lucrative IV on the options. It is there for a reason. regards,
Welcome! The screenshot shared by ranviraaj about NSE seeking clarifications already mentioned, in the last line, about the reply from PCJ. Maybe this is what panic does. Rest was easy!
We are a low-trust economy, very inefficient that way, with boxed-in thinking patterns. No Business wants to go bust, or lose money, risk lives and reputations for some gains. Even Gitanjali and NiMo could have paid back loans (gotten in whichever way, but hopefully mostly employed in business activities), but when you completely disrupt a business, they did not even have a single chance. Well, the govt would just have shrugged and run the printing presses for few more hours that night and voila! cash…recap etc…order some pakodas and tea, for the party
As per clarification submitted by the company :
“THE COMPANY HAS A CONSORTIUM LOAN AGREEMENT WITH ITS LENDER AND AS A PART OF LOAN COVENANTS, THE CONSENT OF LEAD BANK IS REQUIRED FOR ANY CHANGE IN CAPITAL STRUCTURE”.
Was the company not aware of loan covenants before declaring buy back.
Why the company had not obtained NOC before declaring buyback.
I do not know how can a management be so casual in declaring buybacks.
Retail Investors might have lost a lot due to the casualness of management.
Disclosure : Not invested , but earned a lot of experience by tracking this company.
Would continue to track but not invest.(In this market learning is more valuable then earning)
It is a very lame excuse. I do not believe in this because their CFO is a banking guy with 22 years of experience with SBI as per his linkedin profile.
Surprisingly , Sanjeev Bharat is not signing the update letters and other disclosure documents submitted to exchanges after the buyback was withdrawn. I see company Secretary or Balram Garg is signing these documents which was not the case before that 25 May typo error episode. Also he has stopped replying my emails, and asking to contact investors email contact…
*Bhatia… should be read
Finally some good news on the debt front. Well, it is mixed but I would like to see the glass 90% full than 10% empty. Please check details here: Ind-Ra is no longer required to maintain the rating, as there is no debt outstanding.
This is talking about their Commercial papers (3-6 month debt) of 200 Crores. If we see the earlier ratings then we understand that the initial plan was to raise 500Cr but then it was curtailed to 200Cr and now that too is paid back.
The negative part is that the rating was downgraded before withdrawal. The reason for Rating Watch Negative status which converted itself in to the downgrade was related to share price erosion in the month of April and hence possible loss of liquidity. Well, those concerns remain but with no debt outstanding status there should not be any problem to raise working capital requirements. As @LTInvestor has earlier pointed out there are no pledged shares either. Overall it seems all other sins apart the PCJ management is at least true in their intent to reduce debt. I would take it as a big relief/ plus. regards,
Yes- this is good news. PCJ has filed an added clarification on this rating withdrawal to exchanges where they have highlighted (in bold) about he debt reduction part as @neopandit mentioned. This time the CFO Sanjeeev Bhatia has signed the release so @ranviraaj this should also be construed as good news. https://www.bseindia.com/corporates/anndet_new.aspx?newsid=7eb86a4c-b792-4f24-b426-26190314eeb3
All things said and done nothing real has so far come against PCJ.
They paid this on 27 April 2018 , so I think this is already priced in and the debt which company has mentioned in the presentation is excluding of this commercial paper debts. Please correct me if my understanding is wrong.
No, all numbers on the presentation were as of march 31st. Last year out of 650 odd ST debt 192 was the CP drawn. I assume this year the entire amount was drawn. Total ST debt is 1000 odd crores.
I would not look at todays price movement. Expiry day. Interestingly 100CE for todays expiry is still adding open interest. Someone actually buying it!
Thanks @LTInvestor for the details. However, I was not able to link it to the table posted along with. (1) I guess last year is year ended in Mar 17 and 650 odd is 634Cr of ST liability. Am I right in those assumptions? Also, (2) I could not understand the 192Cr of CP out of 650 that you have mentioned. Other current liabilities are 228Cr and lastly, (3) you have mentioned “I assume this year the entire amount was drawn” meaning which amount? The 200Cr CP that IND-Ra was rating? And is your assumption based on the other current liabilities remaining in the same ball park?
Actually, I am hoping to learn the basics of fin statement analysis through this forum with a hands on approach. So, I want to confirm that my understanding is correct as well as to get my doubts cleared before I lose my way I also like companies like PCJ with simple biz model/ fin statements as a case study. Thanks for your time and patience. regards,
It take ages to prove someone guilty and more so to prove financial/accounting gimmicks.
By the time the retail investor knows it, damage is done, here it already happened the price drop is real I think around 90%, as retail investors don’t have the patience/financial power.
The price chart is real-no business loses around 90% value in 6 months. I think just see the chart and it says in the last 6 months - get out of it - as simple as that.
PS:Nothing against PCJ, only part of my learning, so that I will avoid land mines in the journey to financial freedom.
Yes, I did not have the exact number. ST borrowings of 634 crores out of which CP was 192cr. So this year I assumed that they drew the entire 200Cr on the paper which was repaid in April. Yes Ind-Ra was rating those paper. 200 will be part of the 1000 St borrowings o/s.
Not sure about other current liabilities. Those must be payables to customer or government authorities. Else it will be shown under trade payables.
You are right…retail would be the last to know. Let me lay down my thought process… I guess there are two ways one could approach this:
- Fraud-> leading to collapse in stock price
- Collapse in stock price -> and hence the post-facto deduction that all along fraud was being perpetuated
If you look at category 1, Vakrangee, Kwality, Manpasand could perhaps if I speculate can fit in there. Auditors resigned, treasury policy changes, promoter pledges etc and hence the collapse in the price.
PCJ to my mind till now (i.e. as of writing this) based on the available data and information is still not in category 1. Whatever we have seen so far- gifting of shares, Vakrangee buying, withdrawal of buyback due to the alleged NOC not being given by the Bank etc- I am not sure if they are straight examples of fraud. For all of these there could be alternate narratives. There are lot of allegations- Balram Garg arrested by CBI, they are linked to Nirav, money laundering what not- but I guess these are all still allegations. These are not supported by facts- at least not in the public domain. You can blame these guys for professional inaptitude; excess greed; trying to play around with rules etc but I am not sure if there is a fraud per se like say Satyam. They published audited numbers on May 25th and I reckon the auditor would (and should) have been doubly careful with all the other fiascos happening. Now I by no means know how the future unfolds but this is what I mean when I say “Nothing real has come far”.
Agree with you. However, one thing is not clear to me since I joined PCJ shareholders - in mid June 2018. Why everyone treats “Vakrangee buying PCJ shares” as fraud? Not even remotely trying to defend PCJ management here but what can a management do if someone buys the shares. The gifted shares were about 2.6% and Vakrangee stake is 0.5% so those two also do not match. For quite some time, I thought may be the gifted shares landed up with Vakrangee etc. because I did not know when and how many shares were gifted. That became clear only when I saw the postal ballot notice. But the quantities do not match. So, can someone please tell me why Vakrangee buying shares of PCJ is treated as a fraud. Thanks, regards