Shares of jewellery-maker PC Jeweller recovered most of its losses after nosediving nearly 60% in the early morning trades on Friday after company's management said that fundamentals of the firm are strong.
Shares of jewellery-maker PC Jeweller recovered most of its losses after nosediving nearly 60% in the early morning trades on Friday after company’s management said that fundamentals of the firm are strong. The concerns rose over company due to its affiliation with financial services firm Vakrangee which is reportedly under a SEBI probe, frightened investors. Earlier on 12 January last week, Vakrangee bought about 50% stake in PC Jeweller, purchasing around 20 lakh shares at Rs 561.71 per equity share. Shares of PC Jeweller faced a knee-jerk reaction as investors sentiments soured following distress over shares of Vakrangee as they are on a continuous falling trend since 25 January 2018. The stock of Vakrangee had tumbled about 48% in the last 5-day period from 25 January to 2 February.
Vakrangee is reportedly facing a detailed investigation from Indian capital market regulator SEBI for the alleged stock price and volume manipulation. Following the sharp decline in the share prices, stock exchanges have sought clarification from Vakrangee Ltd on 2 February 2018, with reference to decrease in Price, for which the reply is awaited. In the mid-morning session, shares of PC Jeweller pared off most of the losses but were still trading in the red, down 16.56% at Rs 403.5.
“This is more of a panic reaction. The company remains very strong on fundamentals and our expansion plans are on track as planned. Further, we have no business agreement with Vakrangee and none of our promoters have sold any stake in the firm,” Sanjeev Bhatia, Chief Financial Officer (CFO), PC Jeweller said to CNBC-TV18.
The stock of PC Jeweller plunged heavily, posting a massive single-day slump of 60%. PC Jeweller shares crashed as much as 59.66% to a day’s low of Rs 195.1 on BSE while the stock tanked 55% to the day low of Rs 217.95. A heavy trading volume has been witnessed in the shares of PC Jeweller, as at 12:20 pm, more than 10.7 crore shares exchanged hands with about 9.6 crore shares on NSE alone. Following a steep decline in the share prices of PC Jeweller, about Rs 11,000 crore washed away from the market capitalisation of the company. The market capitalisation of PC Jeweller slumped Rs 11,388.94 crore to Rs 7,701.85 crore at the day’s low price from Rs 19,090.79 crore.
Earlier last month, PC Jeweller reported a 52% increase in its net profit to Rs 162.71 crore for the quarter ended 31 December 2017 on the back of higher sales and profit margins. PC Jeweller had posted a net profit of Rs 106.97 crore in the same period a year earlier. The total income (operating revenue plus other income) rose to Rs 2,690.42 crore in the third-quarter of the current fiscal from Rs 2,121.28 crore in the corresponding period of the previous year. PC Jeweller started its first showroom in 2005 in New Delhi and today have a 79 showrooms across 62 cities and 18 states.
Meanwhile, India’s stock markets crashed in the morning trades after opening lower on Friday following the impact of Budget 2018 as Arun Jaitley introduced LTCG at 10% and raised the fiscal deficit target for the financial 2018-2019 at 3.3%. BSE Sensex lost as much as 591.69 points to hit a day’s low of 35,314.97 whereas NSE Nifty tumbled 190.4 points to hit a day’s low of 10,826.5. Finance Minister Arun Jaitley presented the last full-year Budget of NDA government before 2019 General Elections. Shares of blue-chip companies such as HDFC, HDFC Bank, ICICI Bank, Reliance Industries, L&T, Kotak Mahindra Bank, Maruti Suzuki, IndusInd Bank, Axis Bank, SBI and ONGC contributed heavily to the Sensex declines.