Why has this smallcap jewellery stock surged 60% in September? Details here
Source: Business Standard
PC Jeweller’s shares were locked in 5 per cent upper circuit at Rs 177.95, also its multi-year high on the BSE, on Monday’s intra-day trade amid heavy volumes. The rally in the stock came ahead of a board meeting scheduled for today to consider a proposal to split the stocks of the company.
Till 12:19 PM, a combined 7.57 million equity shares had changed hands and there were pending buy orders for 2.9 million shares on the NSE and BSE. In comparison, the BSE Sensex was down 1.1 per cent at 84,625.
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“A meeting of the board of directors of the company will be held on Monday, September 30, 2024, inter-alia, to consider and approve the alteration in the share capital of the company by sub-division / split of existing equity shares having face value of Rs 10 each, fully paid-up, as may be determined by the board,” PC Jeweller said in an exchange filing.
Most companies opt for a stock-split after a sharp surge in their market price, with a view to enhance the liquidity of the company’s equity shares and to encourage participation from retail investors by making equity shares of the company more affordable.
The stock of smallcap jewellery company PC Jeweller is quoting higher for the sixth straight trading day, having surged 28 per cent during the period. It is trading at its highest level since May 2018. It had hit a record high of Rs 600.65 on January 16, 2018.
An upward movement in PC Jeweller’s stock price came after Bank of India granted approval to the one time settlement (OTS) proposal submitted by the company, on September 26, 2024.
So far in the month of September, the stock has rallied 60 per cent. In three month, it zoomed 249 per cent, while, in the past one year, it has skyrocketed 577 per cent from the level of Rs 26.30 on the BSE.
“With this approval, all the fourteen consortium member banks have approved the OTS proposal submitted earlier by the Company,” it added.
PC Jeweller is one of the prominent jewellery companies in the organised jewellery retail sector in India. It is engaged in the business of trade, manufacture and sale of gold, diamond, precious stone, gold and diamond studded jewellery as well as silver articles. As on March 31, 2024, the Company had a total of 60 showrooms, including six franchisee showrooms, apart from four manufacturing units in India covering 12 States and three Union Territories.
The company has launched a number of jewellery collections over the years. Some of its prominent jewellery collections are Anant, Dashavatar, Bandhan, Amour, Wedding Collection, Animal Collection, Folia Amoris, The Fluttering Beauty, Mens Collection, and Hand Mangalsutra, among others.
Subsequently, the company and its lenders were involved in various litigations, PC Jeweller said in its FY24 annual report. It added that it has also taken proactive steps to resolve the legal cases by approaching its lenders regarding the issue of unpaid debt, with a one time settlement (OTS) proposal.
Keeping in view the aforesaid positive developments, the company has again started focusing on increasing its brand presence and has started its marketing initiatives for the same.
The Indian jewellery retail sector’s size in FY23 was close to $70 billion. Within this landscape, organised retail accounted for about 37 per cent, encompassing both national and regional players. Projections indicate that the jewellery retail market, poised for growth, is expected to reach approximately $145 billion by FY28.
This optimistic outlook is attributed to the expanding economy, increased disposable income, a surge in consumer demand for gold, the upward trajectory of gold prices and rising interest in other categories such as diamonds, other precious stones and costume jewellery, PC Jeweller said.
The branded jewellery retailers are, however, expected to record healthy revenue growth of 20-22 per cent on a YoY basis in FY25, with projected volume growth of around 5 per cent year-on-year (Y-o-Y, led by aggressive store additions, changing consumer preferences, continued rise in gold prices and steady wedding and festive demand due to the strong cultural affinity of Indians to gold, the company said.
First Published: Sep 30 2024 | 1:25 PM IST
