PC Jeweller’s Stock Soars 5% Amidst 1:10 Stock Split Announcement and ₹646 Crore Fundraising Plans

PC Jeweller’s Stock Soars 5% Amidst 1:10 Stock Split Announcement and ₹646 Crore Fundraising Plans

Shares in PC Jeweller surged 5 per cent to a new 52-week high of ₹187.07 after the jeweller announced a 1:10 stock split and said it will raise ₹646 crore. Under the plan, every share of ₹10 will be divided into ten shares of ₹1. Apart from this, PC Jeweller is looking to raise money with the issue of 11.5 crore fully convertible warrants, priced at ₹56.20 each. This has come after an exercise designed to improve liquidity and shareholder value, as the stock has returned a staggering 614 per cent over the past year.

Key Milestones on the Growth Curve for PC Jeweller

PC Jeweller has been one of the biggest jewellers in India and has had its share of ups in terms of business through its course. Over the last one year, the company witnessed spectacular gains. The company announced its 1:10 stock split in which every existing ₹ 10 share would be split into ten shares of ₹ 1 each. This step towards more accessible equity to retail investors underlines PC Jeweller’s interest in increasing shareholder value. The company is projected to mop up ₹646 crore by issuing 11.5 crore fully convertible warrants priced at ₹56.20 each.

The announcement of this stock split comes after a tremendous rise of 614% in the stock prices in the past 12 months. Year so far, the stock of PC Jeweller has surged by 227.02% and over last 12 months, 483.89% for the company, which states that confidence among investors is now building in the brand.

Good Financial Performance

PC Jeweller has reported outstanding finances in the last fiscal. The company said that in FY 2024, it had net profits at ₹156.06 crore in contrast to a loss of ₹171.62 crore in the previous fiscal. This is 492.72% more than what the company experienced during the previous fiscal, so all the right things seem to be happening for the company.

The EPS in the first quarter of FY 2024 has almost tripled for the company, to ₹3.35 as compared to the same quarter of previous year with a rise of 190.79%. Revenue improved by 727.28%, and the bottom line increased by 946.02%. This is the point where we can directly compare the improvement in the performance of the company with eight quarters earlier. That commitment towards the bottom-line improvements and increasing operational efficiency distinctly in this case is that of PC Jeweller.

Stock Split and Investor Sentiment

The 1:10 stock split announcement is generating enough buzz among investors. Since stock splits are normally pursued for the purpose of liquidity enhancement-the shares get cheaper, which would increase the investor base-the act can also trigger trading since more retail investors may now have the ability to buy in at a lower price per share.

PC Jeweller’s stock rise by ₹157.39-the highest since April 2019, while it gained 10% over the last four trading sessions. In contrast, the stock finally touched a multi-year high at ₹169.69 on September 27, 2024 also because of a 5% increase.

Approval on Growth Strategy and One Time Settlement

This was also because of an Ots announcement the company declared with Bank of India on 26 September 2024. All the fourteen consortium banks have accepted PC Jeweller’s OTS proposal so this news is strengthening the financial muscle of the company. This has been raising investor confidence and helped the stock soar 18.83% in the last five trading sessions.

At a market capitalization that has touched ₹7,530 crore, long-term growth strategy seems to be working for the company. Institutional investors such as LIC backing the company certainly made it grow like any other best-performing stock in the list with stock delivering 200% in the last six months and impressive 511% in a single year.

Risks Associated and Risk Factor for Investor

While PC Jeweller is rewarded with an excellent return over the past few months, investors need to keep in mind the risks. Given that the Relative Strength Index of the stock stands at 74.38, this stock is appearing overbought and in a position to be volatile in the immediate to short-term time frame. Moreover, smaller-cap stocks such as PC Jeweller have more volatility than large-cap companies, which might thus cause a swing in prices post-split.

Outlook

The planned stock split, combined with the issuance of fully convertible warrants, points to a firm intention by the company to improve liquidity, attract more retail investors, and increase overall market activity. The Board of Directors will be expected to review and confirm the decision at the scheduled session on September 30, 2024 for making the stock easy to trade with better turnover and cut some of the costs associated with trading for small investors.

At the moment, the outstanding performance from PC Jeweller along with other strategic steps towards growth positions the company to do well in the near future. This gives the potential investors an opportunity to anticipate the latest news created by the Board of PC Jeweller, and if last showcases of performance are anything to go by, then PC Jeweller may end up performing better in terms of making a market gain.

Conclusion

The company’s intention to split the stock 1:10 and also raising ₹646 crore is a cut-and-dried indication that the company is on an upward trajectory. When the stock price has surged 614% in the last one year, net profit has increased by 492.72%, and market interest is sufficiently high, investor interest is well set to continue such a trend in the upward momentum. Investors, however, must keep a watch on the market trends and how the company progresses further, which will set off the intentions of earnings reports for long-term investments.
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