Jewellery Stock Locked In 5% Upper Circuit After Kotak Mahindra Bank Approves One-Time Settlement Of Dues

Shares of PC Jeweller saw a significant rise of nearly 5% in early trading today, reaching Rs 129.26 at the upper circuit level. This surge came following the announcement on Sunday that Kotak Mahindra Bank had approved a One-Time Settlement (OTS) for the company's outstanding dues. The approval brings relief to PC Jeweller, marking a key development in its financial recovery journey.

In a regulatory filing, PC Jeweller confirmed the approval, stating 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 OTS proposal includes cash and equity components payable under the settlement, as well as provisions for the release of securities and mortgaged properties. This approval is expected to ease the company's debt burden and enhance its financial stability moving forward.

The approval of the OTS comes at a pivotal moment for PC Jeweller, which recently reported a dramatic financial turnaround in the first quarter of FY25. Domestic sales for the quarter reached Rs 401 crore, a huge improvement from Rs 67 crore in Q1FY24 and Rs 48 crore in Q4FY24. In comparison, the company's total sales for the entire fiscal year 2023-24 stood at Rs 189 crore, highlighting the significant growth in the most recent quarter. The company's EBITDA also saw a sharp improvement, recording a profit of Rs 89 crore in Q1FY25, compared to a loss of Rs 42 crore in Q1FY24. Operating profit (Profit Before Tax, excluding interest on the refund of income tax) stood at Rs 49 crore for the quarter, and the net profit surged to Rs 156 crore, marking a strong recovery from the net loss of Rs 172 crore posted in Q1FY24.

PC Jeweller's financial restructuring has been a critical aspect of its recent success. The company's OTS offer to a consortium of 14 banks has already been accepted by 12 banks, with two more actively considering the proposal. This OTS arrangement will help the company settle its dues with reduced financial pressure, allowing it to focus on operational improvements and growth.

To further support its financial recovery and future growth, PC Jeweller has received shareholder approval to raise Rs 2,705.14 crore through a preferential issue of warrants. This capital infusion will provide the company with the necessary resources to repay its debts and invest in its expansion plans.

The company's extensive network of 80 showrooms across 66 locations in 17 states and union territories in India has been instrumental in its recovery. Supported by strong manufacturing capabilities, PC Jeweller has restored customer trust, which is crucial for sustaining its growth trajectory.

Founded in April 2005 by brothers Balram and Padam Chand Gupta, PC Jeweller has grown from a single store in Karol Bagh, New Delhi, to a leading player in India's jewellery market. Its robust operational foundation, combined with visionary leadership, has enabled the company to navigate challenges and emerge stronger.