PC Jeweller slumps after CARE downgrade

PC Jeweller fell 6.37% to Rs 21.3 after CARE Ratings downgraded the medium-term instrument of the company.

The company announced after market hours on Tuesday, 10 December 2019, that CARE Ratings downgraded the ratings on the company's medium term instrument fixed deposit programme to 'CARE D'.

The revision in the rating factors in stressed liquidity position and deterioration in the financial flexibility of the company which has led to instances of devolvement of Letter of Credits (LC) and overutilization in its working capital limits for more than 30 days.

The CARE Rating is specifically for the company's fixed deposit programme which stands suspended from June 2019 onwards and no fresh deposits has been accepted by the company thereafter.

Credit rating agency, CRISIL, after trading hours on Monday, 9 December 2019, downgraded its long term and short term ratings on the bank loan facilities of the company to 'CRISIL D', citing similar factors.

Following the downgrades, PC Jeweller clarified that Indian jewellery demand during Q2 at 101.6 tonnes was almost a third lower year-onyear (Y-o-Y) due to weaker consumer sentiments and there was a decline of nearly 51% in Indian bullion imports on quarter-on-quarter (Q-o-Q) basis and the company is no exception to it.

The situation has, however, changed with the onset of festive season from October 2019 onwards. The cash flows have started and the company by the end of November 2019 has adjusted 90% of the invoked Standby Letters of Credits (SBLCs). There is no further invocation of any SBLC, the company added.

Shares of PC Jeweller have tumbled 24.06% in five trading sessions from its previous closing high of Rs 28.05 on 4 December 2019.

In the past one month, shares of PC Jeweller slumped 37.44% to its current market price of Rs 21.3. The stock was currently trading below its 50-day moving average (DMA) placed at Rs 31.45, and below its 200 DMA placed at Rs 57.46.

On a consolidated basis, PC Jeweller's net profit fell 51.2% to Rs 46.38 crore on 29.6% decline in net sales to Rs 1,212.19 crore in Q2 September 2019 over Q2 September 2018.

PC Jeweller is engaged in the business of manufacture, retail and export of jewelry.

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