PC Jeweller shares hit upper circuit after debt settlement update with Bank of Baroda

Stock market today: Despite volatility in the Indian stock market, PC Jeweller shares witnessed strong buying interest on Monday. Today, PC Jeweller's share price opened with an upside gap at ₹69.14 apiece on the NSE and touched an intraday high of ₹7061 apiece within a few hours of the Opening Bell. While climbing to this intraday high, PC Jeweller shares locked in a 5 percent upper circuit.

According to stock market experts, PC Jeweller shares are rising despite selling pressure in the Indian market. The jewellery brand has declared that it will settle its outstanding balance with the Bank of Baroda. Last week, PC Jeweller agreed to pay its outstanding dues in a one-time settlement with IndusInd Bank. They said that the Company is showing seriousness about the outstanding debt of 14 banks, and the market is taking it positively.

Why are PC Jeweller shares skyrocketing?

On reasons that are fueling PC Jeweller shares, Avinash Gorakshkar, Head of Research at Profitmart Securities, said, "The immediate reason for the rise in PC Jeweller share is the Company's declaration to settle down its outstanding with Bank of Baroda through the One Time Settlement (OTS) method. They declared that they would settle their outstanding balance with the Bank of Baroda using OTS methodology after implementing the same methodology to clear its outstanding dues with the IndusInd Bank last week."

Akriti Mehrotra, Research Analyst at StoxBox, said, “PC Jeweller, a prominent player in India's jewellery sector, faced substantial financial challenges since February last year when loan defaults amounted to ₹3,466 crores, leading to banks recalling loans. To address this, the Company negotiated a one-time settlement (OTS) with a consortium of 14 banks, recently securing approval from Punjab National Bank for an OTS totalling ₹478 crores. Concurrently, PC Jeweller is intensifying efforts to enhance its brand presence and launch new marketing initiatives to stabilise operations.”

The StoxBox expert said that the Company's board recently approved a significant fund raise of around ₹2,705 crores through new share issuance, aimed at fortifying financial stability and supporting future growth plans. This contributed to the recent surge in PC Jeweller's share price.

PC Jeweller share price target

On the outlook for PC Jeweller shares, Sumeet Bagadia, Executive Director at Choice Broking, said, “PC Jeweller shares have made a strong base at ₹60 whereas the stock is facing a hurdle at ₹80. On breaching this hurdle, the jewellery stock may touch ₹90 apiece level in the short term.”

On Sunday, PC Jeweller informed Indian exchanges about outstanding debt settlement via the OTS method, saying, "This is to inform that Bank of Baroda vide its letter dated July 18, 2024, which the Company received on July 20, 2024, has conveyed its approval to 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, the release of securities and mortgaged properties, etc."

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