PC Jewellers

(atul1082) #681

It’s being suspected that jewellery companies earned money in old currency and ND then got it accomodated through various channels I like
vakrangee .I m not claiming that PC did but so many companies did similar to things, why else vakrangee would invest in pcj.

(Cshar) #682

PC Jeweller is a classic case of lot of mixed events, no doubt that it’s products are appericiated by customers, 2nd across India by sales, good brand build up, 20% growth converting on showrooms to franchise model which will increase the margin good market share of 20%, promotor are old Delhi Jeweller knows in-depth of business. PC Jeweller Rose from 270 levels in March 17 to 630 levels in Jan 18 than 85 to current rate. Rise from 260 to 630 was due to pump & dump strategy of Motilal oswal which they have followed in several stocks, MOSL dumped stock at higher levels, fidality had obligation to dump stock due to fund based decisions. Reasons for fall

  1. PCJ involved in fraud LOU/LOI
  2. Tieup with vakrangee for money laundering
  3. Name associated with Vakarangee
  4. Promotor arrested by CBI
  5. Gifted shares to own daughter
  6. Proposed buyback & called off
    7 management is chor, not ethical

I see this as a classic case of fear & greed syndrome as nothing has been proven till date for any scam. Funding was also done in June 17 why so harsh reaction now. Buyback was a foolish idea for small traders only, I am happy it had been called off for any legtimate or non reason. So all in all it’s a 20 % growth company with PE of 5 Sales to Market cap 2, 2nd largest jewellery chain, manageble debts, paid off debts good auditors. It’s trading at 80% discount to intrinsic valuation. What else u will buy?

(manivannan.g) #683

In your claim, most of the points are may be valid (like the money laundering during DeMo), but nothing proven yet. But the following are just rumors, not even allegation:

  • PCJ took LoU (they never took LoC/LoU)
  • Promoter arrested by CBI - on that very same day he appeared on media and given interview, gout away within 10-15 mins of promoter arrest?

(neopandit) #684

Thanks Atul. Actually your reply prompted me to check more about Vakrangee. I had read it to be a software company. Now I understand it provides lot of IT enabled services to grass roots. Still they can not explain vast amount of cash in old currency.
This is the worst thing I experience with PCJ - We keep losing time on a never ending chase that has no answers. May be we are trying to find rational in actions that are reactions to things we will never know. Right? This it self is a good reason (for me) to book loss in INR, close the topic and save time. There is absolutely no learning here (the financial statements are good) besides avoid inexplicable stocks in the first place and dump as soon as possible without offering any benefit of doubt to anyone at any point of time. Price is supreme. Thanks, regards,

(Cshar) #685

Panditji, untill you see things, don’t take decisions in stock market, most of time panic is created to snatch good stocks by spreading rumors, I am not saying PCJ is a good stock. However I decide good and bad stock based on valuations and future cash flows. Current rates Titan is a good company but bad stock and PCJ is bad company and good stock. It will take 1 year for PCJ from turning to good company however at that moment your buying capacities will be limited. Whatever wealth I have created in stock market is with companies which market don’t like & started liking later. All investment which market liked & I bought are suffering. Choice is your. Your need to convince yourself nobody else. Promotor lost 11000 cr in this debacle and he has single investment. :grinning::grinning::grinning:

(Divyanshu Bagga) #686

But you are saying so!

Value is subjective. It is your opinion that differs from the market, and that is perfectly fine, otherwise there will be no market.

Same goes for me. I started by buying metal stocks in 2015. But it is not the only strategy to make money; it certainly was the most vexing one. Take PCJ as example, every day you wonder whether the company is fraud, while the “blessed” companies keep making fresh highs.

(neopandit) #687

I have Ambuja Cements, IDFCBank, Reliance Capital, and Reliance (since the time no one liked it). Before that I averaged up in Cairn and was rolling over one lot of Crude for couple of years. Currently I am holding Silver contract and planning to roll it over. So, your point on taking contrarian bets is well taken on board.
But PCJ is not a contrarian bet at this point of time because there is no visible challenge to the business and the stock price is literally decimated. This basically means I do not have all the inputs. And there seems to be nothing publicly available that I am missing. Besides more people like PCJ today than a quarter before. The number of shareholders has swelled :smiley:

There is a lot of difference, First, Promoter knows the real situation and I do not. If I knew the real situation then I will have no problems - I will know exactly where the biz, stock, and promoters are heading (London, Antigua, Delhi). Secondly, my primary worry is not about my losses in INR. I am worried about my loss of time, loss of attention to other scrips in the portfolio and whatever happens in their environment, and my possible loss of new opportunities. I can not bother myself and neither I am required to be bothered about what is a loss to any other investor in PCJ including promoters. Promoters on the other hand are obliged to care about minority share holders and be transparent in their dealings which they are not, Third, there is no proof that promoters lost a single rupee. You may be stunned by the spectacular notional loss but we do not know what was their position in the derivatives market. This is same as saying RJ loses crores of INR in Lupin and quarter after quarter he adds Lacs of shares in his Lupin holding. And Finally promoters can buy at least 15% stock from the same amount for which they sold, sorry gifted, their 2.6% taking their stake from 60% before gift to 72% now. And that is without running any conspiracy theories about derivatives trades and running/ helping bear cartels which can be and most probably are true.
So, I am not at all impressed by the notional loss of 11000 Crores to promoters as some sort of psychological compensation for loss of my time. Regards,

(bharat19) #688

One interesting thing is that why promoters themselves are not buying if stock is available this cheap…!
I have another holding in GTPL Hathway where prices have gone down almost half due to JIO’s recent announcement and here promoter’s are aggressively buying in last 1 month. This boosts the confidence ! Doing things like cancelling of buyback only harm the company no matter how they justify.
There are hundreds of companies available in market at good price , it becomes difficult to understand why people want to invest in companies with doubtful issues and poor governance. Is it due to greed of doubling money ?

(Arpit Jain) #689

One basic question: As on March 31, 2018, the trade receivables are huge (Rs 1851 Crore, nearly 20% of the revenues), while the trade payables (Rs 3622 Crore) have gone up as well. Looking at the earlier balance sheets (FY16-17 and FY 15-16), the numbers have increased at a huge pace. The main reason for the company’s claim of Rs 1400 Crore cash (in current assets) is the increase in trade payables.

My question is, why are the receivables so high in this particular jewellery company? If the demand is there, nobody would like to sell jewellery on credit right? In comparison, Titan and Thangamayil have minuscule receivables compared to their total sales.

Attaching the balance sheet and PnL for reference:

(Cshar) #690

Cash receivable are from export business as claimed by Company, currently 1274 cr. Trade paybles are gold lease which is close to 3000 cr, inventory is 4100 cr. 425 cr receivable recognized in April 18.

(yudiagg) #691

So can we presume that, by and large, all appears to be well with the balance sheet?

(Arpit Jain) #692

Looking at the breakdown of exports and domestic segments, export sales were Rs 3093 Crore and Domestic Sales were Rs 6521 Crore. So effectively, 41% of export sales (most of which goes to the Middle East I believe) are receivables. Has the management given any explanation for the same?

Also, given the company is going for the franchisee model into the future, the cash conversion cycle should improve. Is this a valid inference?

(Cshar) #693

Balance sheet looks ok, also all fraud issues reported for PCJ from Jan 18, auditors came into scrutiny from April 18, despite all this Walker chandoik released final audits of PCJ. We can safely believe on finals audits due to strong tightening by government.

Coming to movement to Frenchies model, this will be a great step as it will gradually reduce working capital requirement/to turnover ratio and improve margins.

(atul1082) #694

A no of companies bought gold under 80:20 scheme and then reportedly exported to meet the scheme requirement to their own shell companies and got the money back thru round tripping.

(LTInvestor) #695

So have been hanging on this board since the time the gifting of shares were announced. Invested at about 110. Firstly there is more gyaan on how one should handle stocks than actual discussion on the stock. So again listing down my observations on it. There are few more. Will add them as I get time.

  1. Gifting of shares is not new. Have been going on since last Feb when the stock was at 200 and the market was not interested or cared about it then. So very unlikely this time around it got spooked because of that.

  2. Talk about its cash can be till now be seen in a positive light dues to:
    a.) No pledging of shares. Lots of comparison to Treehouse, but those guys were 100% pledged even before anything was out. If these are real crooks and business is fake, then when their value was 16000cr, they should have taken a personal loan pledging the shares at 90%haircut. Still would have got 1600cr cash in hand. Siphon it off to Bermuda. Who cares after that. 1cr loan - your headache. 1600cr loan - banks headache.
    b.) They have repaid 200cr of CP.

  3. Six months are down the line and nothing tangible has come out. If they are frauds, very unlikely in todays environment when banks have become so careful, the 1000cr loan fraud will not be exposed till now.

(xaxa33) #696

The question is who is selling and why:) If you look at the delivery volumes they are like always <15%. So is a small group of _operators _playing with the price. I saw this response of the PCJ Management on a twitter feed. They seem very concerned that ESOPs are losing value! As per them the current fall is “due to short selling in intraday rather than actual selling

(ranviraaj) #697

Roll out of real time Augmented Reality Jewellery Buying Experience.

(Growth_without Debt) #698

At the end of letter contact details image

Last three people from ForunaPR- a firm engaged in PR and Corporate communication. Did PCJ hire the FortunaPR for corporate communication ?

(neopandit) #699

This is a fantastic development particularly when implemented outside the stores - malls, multiplex, and hopefully air port lounges etc. - basically all the places where customers with expendable income are needed to kill time. This will generate fresh business and definitely connect more people/ prospective customers to the brand.
Once inside stores, I doubt if customers will be able to overcome the urge for instant gratification. Will they wait for some particular design which will take say a week or so to arrive at that store? This idea is a step in between a show room and a virtual/ online store.
Most important take away for me in this development is that the promoters are interested in running this business and are living in 21st century. That’s a great relief. Hope they don’t have ideas to de-list this business now.

(vikas sinha) #700


Q1 results date:
The next board meeting of PC Jeweller is to be held on August 10, 2018 for Quarterly Results