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

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.”

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 The petition was withdrawn, as confirmed by the Hon'ble NCLT, Delhi, in its order dated April 30, 2024, the company said.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.

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.

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.

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.

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