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PC Jeweller hits fresh all-time low after Crisil downgrades rating to default category

Liquidity profile of PCJ has deteriorated in the past few months on account of cash flow mismatches.

ETMarkets.com|
Updated: Dec 10, 2019, 03.42 PM IST
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The ratings reflect instances of LC devolvement and overutilisation in working capital limits, large working capital requirement and the risk of unfavourable regulatory changes.
Shares of PC Jeweller hit an all time low of Rs 22.25 in trade on Tuesday after it informed bourses that rating agency Crisil downgraded the long-term and short-terms ratings to the bank loan facilities of the company to ‘CRISIL D’.

Earlier, shares of the company opened the day at Rs 24.70 and hit an intraday high and low of Rs 24.75 and Rs 22.25, respectively.

As per the rating rationale, the downgrade factors in the instances of devolvement of Letter of Credits (LC) and overutilisation in working capital limits for more than 30 days.

The same is reflected of the fact that the liquidity profile of the group has deteriorated in the past few months on account of cash flow mismatches.

The ratings reflect instances of LC devolvement and overutilisation in working capital limits, large working capital requirement and the risk of unfavourable regulatory changes. These weaknesses are partially offset by PCJ group's above-average capital structure, and especially helped by its strong market position in manufacturing and retailing gold and diamond jewellery.

PC Jeweller, however, clarifies that Indian jewellery demand during Q2 was at 101.6 tonnes, almost a third lower YoY due to weaker consumer sentiments. There was a decline of nearly 51 per cent in Indian bullion imports on QoQ basis, they added.

The shares of the company closed 8.08 per cent lower at Rs 22.75 on BSE.
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