Yes… Akash jain has recommended this on 18-April and today he gave the clarification for the same on Moneycontrol :
We gave a view on this company after analysing its fundamentals and business prospects. We were also surprised with the fall in its stock price. Before recommending it to anyone, we relied on the company’s profit and loss account, balance sheet and business prospects as presented by it in its analyst meet and investor presentations. Aggressive store expansion and the presence of auditors like Walker Chandiok & Co LLP gave us the impression that the company was on the right path. We always believe in recommending companies whose promoters’ integrity is not questionable.
Sorry, I’m not sure how to measure the reputation of the analysts who appear in MoneyControl, which includes Raamdeo of MOSL. Even MOSL has issued a buy rating with a target of Rs.650 in Jan-2018, before the Nirav Modi fiasco came into the light.
PC Jeweller is trading at MC of 4363Cr at price of 110/-. The annual sale of PC jeweller is 8400Cr, and profit is 421Cr. So, company is trading at half the sale value and approx 10PE. The debt is around 650Cr and Cash on company books is around 1100 Cr. The company has reputed auditor Walker Chandiok & Co LLP, so it is hard to believe that figures are grossly wrong. The promoter shareholding is intact, with no pledging. There might be some issue of corporate governance as raised in previous post regarding gift of 2%, but such valuations for a strong retail business seems good to me.
Disclaimer: Invested today.
As Far as I can tell one reason of the Fall in PC Jewellers is due to FMR LLC (Fidelity) Sell-Off
24th April FMR LLC holding - 37,574,425 (9.53%)
27th April FMR LLC holding - 32,438,670 (8.23%) (no disclosure but interpreted)
02 May FMR LLC holding - 27,750,204 (7.04%)
Besides this Vakrangee has already sold off their Holdings bought at a High Price (Src: TV Interviews)
Now we can speculate based on above this has led to Panic amongst the Retail investors holding this Stock and they have contributed to the sell-off as well.
Promoter Holding continues to be 58.5 To 59 % (Src TV Interviews by Sanjeev Bhatia President Fin)
Disc: I tend to Short sell in cases like this, Might Buy PCJ on it’s way up.
Yeah. So now we know who is selling. That at least solves some of the mystery and leaves us with the question - Why is Fidelity (a reputed financial house) with a sizeable approx 10% holding selling ? Also they bought about 26 lakh shares of PCJ (6% of their total holding previous to selling ) between Feb and April after the vakrangee news came out.( as per below article)
You are Right Fidelity can hold if they wanted to , as I sure about their reputation.
They probably know some inside story that we don’t this is why i think they are selling off even though they bought at a High Price.
They are making HUGE losses here.
Absolutely.If a reputed fund is selling left and right at a big loss, there is definitely some issue.Surprisingly nothing from sebi, auditors etc etc as to why it is happening while investors have lost almost 75% in vakrangee pcj and kwality
Morgen stenly invested in Gitanjali in Jan, LiC holding both PCJ & Gitanjali. You are trying to say that Morgen stenly didn’t know what is happening in gitanjali. Don’t give much weightage to funds, there decisions are some times very foolish. PCJ is different from Vakarangee, kwality & Gitanjali. PCJ has 100 showrooms, 80 owned, & LT debt is 800 cr with total 3000 cr. They have done some small mistake by gifting 2% stake however shocked to see reaction from markets. Stock market is not an easy cakewalk. I am increasing my holdings in daily basis. It will boune back from next month.
There is news floating around since this morning about CBI investigating PC Jeweller and there is also unconfirmed news about Mr Balram Garg being arrested.
As i said, this is unconfirmed at the moment and could be just rumours - am posting this here since people who are long on this stock may want to dig into this and take appropriate action.
Apart from this channel, nobody else reported this news. They are claiming that “PC Jewellers being investigated for dealings with politicians”. Sounds funny to me What i observed is they published this at 10:01am, it’s been more than an hour, if its for real, I’m sure, most of the business channels would’ve published this.
EDIT: Balram Garg just spoke to zee business. (Below is just image, it’s live in zee biz)
Hope media houses behaves sensibly and responsibly.
Even if we consider some corporate governance issues , what could be the worst case scenario ?
Can the company shut down in few months ?
Are all the jewelry stores fake (including new ones)
Where can the company be in next 5 years ?
Unless its a too big scam like Nirav modi and Gitanjali , can this company be shutdown ?
They don’t have much debt on balance sheet also like Gitanjali. Stock has corrected more than 80%. It seems v cheap to me. But looking for above questions answers before taking risk again.
Current market cap @price 100 - approx 4000 crores
FY 17 consolidated Revenue - 8474 crores ( market cap to sales <.5)
Current Consolidated EPS - 14.57 - trading at PE 7
PAT annual growth rate last 5 years - approx 17%
Interest coverage ratio > 3
Debt to equity - approx .2
There was a block deal at 10:10 for 16 lakh shares @109. May be that is what is helping stabilize/ help price gain along with the confirmation that Balaram garg wasn’t arrested.
Disc: Invested.
PS: Watching with suspense while munching popcorn, beats any thriller.
Nah! the block deals are always there, it’s the trading operators who does that. At the moment the market is cheering for Balram garg appeared in interview amidst the CBI hoax.
Every year new investors come to the market and think this time it’s different and it’s cheap because its fallen 80% how much it can go more from here …then it falls 80% from there…
First Denial…then finding reasons defending the company… then more smoke comes out…then trying to find facts…then story becomes ugly…then acceptance…booking loss… and then…realization and lesson learned … then move on…
As they famously say History doesn’t repeat itself…It rhymes… isn’t it…
What i observed is they published this at 10:01am, it’s been more than an hour, if its for real, I’m sure, most of the business channels would’ve published this.