PC Jeweller shares up 4% after Kotak Mahindra Bank approves one-time settlement of dues

In its June quarter earnings report, the company announced that it had submitted an Offer for Settlement (OTS) to a consortium of 14 banks.

A Ksheerasagar
Published9 Sep 2024, 10:18 AM IST
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PC Jeweller shares up 5% after Kotak Mahindra Bank approves one-time settlement of dues.
PC Jeweller shares up 5% after Kotak Mahindra Bank approves one-time settlement of dues.(Reuters)

Shares of PC Jeweller jumped nearly 4.3 percent in today's early morning trade, reaching 128.45 apiece. This sharp rally came after the company announced on Sunday that Kotak Mahindra Bank approved a one-time settlement of its outstanding dues.

In a regulatory approval, PC Jeweller informed that “Kotak Mahindra Bank, via an e-mail dated September 7, 2024, has conveyed its acceptance of the One Time Settlement (“OTS”) proposal submitted by the company. The company had opted for OTS to settle the outstanding dues. The terms and conditions of approved OTS include cash and equity components payable under the settlement, release of securities and mortgaged properties, etc.”

Also Read | PC Jeweller shares jump 85% in one month. Is there more steam left?

In its June quarter earnings report, the company announced that it had submitted an Offer for Settlement (OTS) to a consortium of 14 banks. This consortium had granted in-principle approval for the OTS, pending approval from their respective internal authorities.

Additionally, in the first quarter of FY 2025, the State Bank of India, the lead bank, filed for withdrawal of its petition before the Hon'ble NCLT, Delhi, which sought the initiation of the Corporate Insolvency Resolution Process under Section 7 of the IBC. The petition was withdrawn, as confirmed by the Hon'ble NCLT, Delhi, in its order dated April 30, 2024, the company said. 

The company has also secured shareholder approval to raise 2,705.14 crore through a preferential issue of fully convertible warrants. These funds are earmarked for repaying outstanding bank debt, meeting working capital requirements, and fulfilling general corporate purposes.

Also Read | PC Jeweller shares hit upper circuit after debt settlement update with BoB

The company has refocused on enhancing its brand presence and initiated marketing strategies that delivered noticeable results in Q1FY25. These positive developments have been reflected in the company's stock performance, which has gained 147 percent since June.

As of June 30, 2024, the company maintains a robust network of 57 showrooms (including four franchise locations) across 42 cities in 15 states. In its Q1FY25 investor presentation, PC Jeweller said that the company’s core strengths, such as its manufacturing and design capabilities, skilled workforce, established systems, and customer policies, remain intact. 

With rising sales and operational momentum, the company is optimistic about reclaiming lost market share and delivering strong performance in upcoming quarters.

Also Read | PC Jeweller to raise ₹2,705 crore via share warrants issue

Turnaround quarter

Q1FY25 marked a turnaround for the company, with domestic sales reaching 401 crore compared to 67 crore in Q1FY24, 48 crore in Q4FY24, and 189 crore for the full FY2023-24. This sharp increase in sales highlighted the company’s recovery and improving performance.

The company's EBITDA also saw significant improvement, recording a profit of 89 crore in Q1FY25, compared to a loss of 42 crore in Q1FY24. The company posted an operating profit (PBT, excluding interest on the refund of income tax) of 49 crore for Q1FY25.

Also Read | PC Jeweller Q1 results : profit at ₹156.06Cr, Revenue increased by 492.72% YoY

Net profit for the quarter surged to 156 crore, a remarkable turnaround from the net loss of 172 crore. The company had previously reported losses for six consecutive quarters, from December 2022 to March 2024.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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First Published:9 Sep 2024, 10:18 AM IST
Business NewsMarketsStock MarketsPC Jeweller shares up 4% after Kotak Mahindra Bank approves one-time settlement of dues

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