Shares of PC Jeweller, which had delivered a multi-bagger return in CY22, have now been trading at lower circuits for the last 18 trading sessions.
In 2022, the company shares saw an unprecedented rally, soaring from ₹26.90 apiece to ₹83.40, delivering a staggering return of 210%. However, 2023 brought a different story for stock. Despite the strong performance in the previous year, the stock began to fall rapidly this year, losing more than half of its value in a month.
The stock started plummeting on January 11 at around ₹83.15 apiece, and it has remained in the same trend to date, locking lower circuits with each passing day, dropping to ₹30.30, losing its value by 63.55 percent.
The stock hit a 52-week high of Rs. 105.50 apiece on October 28, 2022, and a low of Rs. 18.6 on March 29, 2022, implying that it is currently trading at 71.5 percent below its 52-week high. The sudden drop in the stock pushed it back to where it was six months ago, wiping out all the gains made during that period.
On February 2, the market regulator (SEBI) sought clarification from PC Jeweller on significant movement in the company's share price. In its reply on the following day, the company said that its accounts have been classified as NPA with its bankers since June 2021 and that its resolution process has been underway since then.
However, State Bank of India (SBI) moved the Debt Recovery Appellate Tribunal (DRAT) Delhi on January 18, 2023, against the company, seeking full recovery of its outstanding exposure, it said.
"In response, the company has filed an appeal against the same, and the matter is currently sub-judice and there is no clarity on the outcome of the same," PC Jeweller stated.
The company, however, anticipates that the movement in its share price may be on account of this impending announcement alone, it added.
As the legal disputes between the company and the State Bank of India get underway, on February 7, the PC Jeweller in another exchange filing said that four other banks of the consortium, namely IDBI Bank, Indian Bank, Bank of India, as well as Karur Vysya Bank, have also issued their loan recall notices.
The bank may issue a recall notice if the borrower is in default or if the loan is no longer performing. The recall notice is a formal request for the borrower to repay the outstanding loan balance immediately. The bank recalls the loan because it wants to recover the loan amount and minimize its financial risk.
In November last year, PC Jeweller said that it had defaulted on ₹3,466.28 crore in loan facilities from banks and financial institutions for the second quarter.
According to the company's Q2 annual report, lenders are SBI, Punjab National Bank, Union Bank of India, Axis Bank, Kotak Mahindra Bank, and IndusInd Bank.
On the financial side, In Q1 FY23, after nine consecutive quarters of losses, the company reported a consolidated profit of ₹74.4 crore as against a loss of ₹65.6 crore in a similar quarter of last fiscal.
The company continued with the same magnitude in the second quarter and reported a net profit of ₹85.9 crore as against a net loss of ₹78.9 crore in Q2 FY22.
PC Jeweller Limited is an India-based company that is engaged in the business of trading, manufacturing, and selling gold, diamonds, silver, and precious stones. The company has showrooms across 67 cities and 17 states in India.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
