The share price of PC Jeweller crashed nearly 26% on Monday after the company decided to withdraw the proposed buyback of shares worth Rs 424 crore because it did not get the approval from its bankers. The stock declined 25.89% to close the session at Rs 88.90 on BSE. Intra-day, it had slumped 28.22% to Rs 86.10 — its lowest level in 52 weeks.
On NSE, the shares of the company plunged 25.81% to end at Rs 88.95.
PC Jeweller’s market valuation got eroded by Rs 1,223.18 crore to Rs 3,506.82 crore. In an exchange filing on Friday, PC Jeweller said its board of directors at its meeting decided to withdraw the buyback offer as the company did not receive the necessary no-objection certificate from its bankers.
In another exchange filing, PC Jeweller said it had to take bankers’ permission as part of the standard loan covenants procedure. The bankers recommended that the company should continue to focus on growth and give priority to reduce its interest expense to the maximum extent possible, the filing said.
The board of PC Jeweller on May 10 approved a buyback of up to 1.21 crore shares, or 3.07% stake, at Rs 350 apiece for an aggregate amount of Rs 424 crore. The company said the promoters would not participate in the buyback.
The company’s shares fell 82% from the February 2018 over concerns of its ties with Vakrangee which was facing a Securities and Exchange Board of India (SEBI) probe for the alleged price and volume manipulation.
“In a market where the overall market breadth is very weak, and liquidity is very hard to come we should be in quality names. Wherever you have doubts or where corporate governance is an issue it is best to avoid it. Any stock which has corporate governance issues has to be avoided,” said A K Prabhakar, head of research at IDBI Capital.