LIC-Backed Stock Hit 5% Upper Circuit Today After Budget; Here’s Why

Today, shares of PC Jeweller Ltd surged 5%, reaching an intraday high of Rs 81.75 per share from its previous close of Rs 77.86. The stock hit a 52-week high of Rs 81.75, with a 52-week low of Rs 25.45. Recent trading sessions have seen the stock consistently hitting upper circuits and 52-week highs with substantial volumes.

The Indian government's recent budget introduced favourable 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. Additionally, 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.

The company has a market cap of over Rs 3,800 crore, with its shares trading at 1.18 times their book value. As of June 2024, the Life Insurance Corporation of India (LIC) owns a 1.45% stake in the company, and FIIs have increased their stake to 2.57% from 0.93% in March 2024. The stock has provided multibagger returns of over 220% from its 52-week low of Rs 25.45 per share, making it a notable Small-Cap stock for investors to watch.

Recently, the company secured approval for its One-Time Settlement (OTS) proposal from both Bank of Baroda and IndusInd Bank, allowing it to resolve outstanding dues through a mix of cash and equity payments. The banks will also release any securities or mortgaged properties held as collateral. This development follows PC Jeweller's board's approval of issuing convertible warrants worth Rs 2,705.14 crore to both promoters and public investors. The raised funds will be used to pay off bank loans (Rs 2,025 crore), meet working capital needs (Rs 529.69 crore), cover general corporate expenses (Rs 150 crore), and manage issuance costs (Rs 0.45 crore). Details on the warrant allocation between promoters and non-promoters (each receiving 15 crore warrants) will be disclosed later.

On July 7, PC Jeweller received a crucial lifeline when Punjab National Bank (PNB), a major lender with an outstanding loan of Rs 478 crore, approved its one-time settlement (OTS) proposal. This development is significant for the jeweler, which is struggling with a debt burden of Rs 3,278 crore owed to a consortium of 14 banks.
PC Jeweller Ltd is an Indian company that designs, manufactures, sells, and trades gold, platinum, diamond, and silver jewellery. It operates across India with multiple brands, including Azva, Swarn Dharohar, and LoveGold, and has created commemorative medallions for the Cricket World Cup. According to its Quarterly Results (Q4FY24) and annual results (FY24), the company reported mixed financial performance.