LIC-Backed Stock Hit 5% Upper Circuit After Securing Debt Settlement With Canara Bank

Today, shares of PC Jeweller Ltd surged, hitting the 5 per cent upper circuit to reach an intraday high of Rs 85.83 per share, up from the previous closing price of Rs 81.75. The stock also marked a new 52-week high of Rs 85.83, with a 52-week low of Rs 25.45. In recent trading sessions, the stock has consistently hit upper circuits and 52-week highs with substantial trading volumes.

PC Jeweller Limited announced that it has received approval from Canara Bank for its One-Time Settlement (OTS) proposal. The company sought this arrangement to resolve its outstanding debt obligations. The approved OTS terms involve a combination of cash payments, equity contributions, and the release of pledged securities and mortgaged properties. This development was disclosed to the public in accordance with SEBI's listing regulations.

With a market cap of Rs 3,994.56 crore, PC Jeweller's shares are trading at 1.10 times its book value. As of June 2024, Life Insurance Corporation of India (LIC) owns a 1.45 per cent stake in the company, while Foreign Institutional Investors (FIIs) have increased their stake to 2.57 per cent, up from 0.93 per cent in March 2024. The stock has delivered multibagger returns of 237 percent from its 52-week low of Rs 25.45 per share.

Recently, the company secured approval for its One-Time Settlement (OTS) proposal from both Bank of Baroda and IndusInd Bank, allowing them to resolve outstanding dues through a combination of cash and equity payments. The banks will also release any securities or mortgaged properties they hold as collateral.

The encouraging outcome comes after the board of PC Jeweller approved the issuing of convertible warrants to public investors and promoters for a total of Rs 2,705.14 crore. The funds that were obtained would go towards managing general company expenditures (Rs 150 crore), covering issue charges (Rs 0.45 crore), paying off bank loans (Rs 2,025 crore), and meeting working capital needs (Rs 529.69 crore). Following that, specifics on the warrant distribution between promoters and non-promoters-each of whom received 15 crore warrants-will be made public.

Additionally, in the Union budget, the Indian government introduced favorable measures for the gems and jewellery sector, including a significant reduction in customs duty on precious metals-gold and silver duty is now 6% each, and platinum is 6.4%. This reduction is expected to lower retail jewellery prices, boost consumer demand, and enhance domestic value addition. Furthermore, the removal of customs duties on essential jewellery-making minerals and support for lab-grown diamonds, along with streamlined export-import processes, heralds a promising future for the industry. The sector is projected to grow to USD 100 billion by 2027, with these budget announcements acting as a significant catalyst.

An Indian business called PC Jeweller Ltd creates, makes, trades, and sells jewellery made of gold, platinum, diamonds, and silver. They have other brands that they use in India, including Azva, Swarn Dharohar, and LoveGold.