PC Jewellers


(Satyamtaneja) #703

Apparently this turned out to be true. Company has scheduled a conference call at 5PM to explain the results. Lets see how much the stock shoots.


(vikas sinha) #704

Q1 results not bad
5% PAT increase YoY
20% PAT increase QoQ
OPM down


(vikas sinha) #705

Management presentation on results:


(LTInvestor) #706

Results update:

I will not spend time on profitability as that is not the concern about PCJ. Besides at Rs. 15 annualised EPS the company is trading at 6x PE at which growth is irrelevant when it comes to deciding whether to invest or not. The only thing important is if the company is real or fake. So coming back to cash and debt.

1. There are lapses in disclosure this quarter and I think it is mostly because B/S has become weaker.

a.) As of 31/3/18 - cash in hand was 1492Cr and they mentioned 417Cr as TR realised post 31/3/18. With a cash profit of 147cr + inventory decline of 319cr, end of quarter cash balances should have been 2375Cr before repaying payables.

b.) However cash in hand is shown as 1162Cr after repaying 426cr to banks and increase of 105Cr of Operational Creditors, so actual end of quarter cash balances was 1693Cr or a shortfall of 682Cr from what is should have been.

c.) Most likely TR realised was used back in the export business leaving 265Cr of unaccounted cash spent. With franchisees been set-up, this must be TR in domestic business. Or maybe loans to franchisee (red-flag)

2. Does not look gross bank debt has not been reduced and the reason is because they do not have the capacity.

a.) In the call they mentioned 3000Cr of Gold loan and 1000Cr of gross debt. Given that 1100Cr was gross debt as of 31/3/18 means that of the 426Cr repayment only 100Cr was for gross debt.

b.) My sense is with everything going on, banks are asking for more collateral against their gold loan and hence FDs created in the banks for the gold loan, leaving only few hundred crores to actually repay debt. Not sure how they will reduce further debt by 1000Cr if most the cash is going as collateral.

c.) This also ties with banks not giving NOC for buyback as there was no capacity in the first place.

Overall, business looks genuine but any further improvement in B/S should not be expected. Should trade at 12-13x atleast.

Disc: Holding at 110 levels.


(skapoor) #710

The Curious Case of PC Jewellers’ Trade Receivables (Thread)


(LTInvestor) #711

Amit Mantri is a top market guru, so he maybe having insider track on this. But in today’s environment where bankers are getting arrested and fired, very difficult to believe that banks have extended a line of 1000Cr and gold loan of 3000Cr to a company faking sales and ramping receivables. Do not think there is another 4000Cr scam out there. That said “India hai, kuch bhi ho sakta hai”, but chances are very low.


(jajushobhit) #713

Another reason for increase in receivables in my opinion is because of accounting of sales. The sale is recognized when goods are sold to the franchise and not at actual sale to customer. As the company is now expanding through franchisee model, it is not surprising to see the no. go up. But the sales no’s should be taken with a pinch of salt.

Regards
SJ


([email protected]) #717

The annual report for the company is available.
Here is the link.

http://kcpl.karvy.com/images/2018/PCJL_7530/PC%20Jeweller%20Annual%20Report%202017-18.pdf


(skapoor) #718

PC Jewellers F&O settlement will be in physical mode from December contracts onwards. See NSE Notice. Will this help in curbing the volatilty in PCJ share price?


(SBT) #719

In their annual report they have not mentioned clearly about the revenue recognition policy. If they push the goods to their franchisee and record it as sales then the entire profit loss picture is different from what has been presented. On the other hand , if they claim to recognize revenue at sales then having such high receivables means only one thing - everything is badly cooked.(Receivables of TITAN as on 31st march is only 192 Cr.) Had it been the first case , the promoters should have started buying at present price as their is some value in the business. In second case they have no option but to keep faking the records and pray for some miracle.
Regards
Disc: invested and in loss


(Cshar) #720

Own stores are 80 and frenchisee only 16 i think.


(RICHAJ) #721

I’ve been going through the voting results for the recent AGM (here) and found that a significant amount of public non-institutional shareholders (~25%) voted against most of the resolutions, including the adoption of the FY2018 financials. Any ideas about why this might have happened? Are these disgruntled shareholders who were hoping for some better response from management about the low stock price?

Also if anyone here made it to the AGM, how was it?