Who would’ve thought that PC Jeweller Board finally decided to approve the buyback of shares which was failed at the start of May?
This huge step of re-acquisition its own stock will lift the PC Jeweller once again. This year hasn’t been good for PC Jeweller who turned volatile in the starting of February by surging 29% to 471 rupees on Bombay Stock Exchange.
It is quite surprising for the company for sudden movement in the price of equity shares which led to trust issues with investors and shareholders. Somehow, the company convinced that the fundamentals of the company remain strong.
To see such days, India’s leading fine jewelry platform decided to use the corporate strategy of “Stock Buyback” against the undervaluation of stock. “52-week low price of Rs 95.05 hit” could be the reason to take such huge step. It is still unclear to see the other motives of PC Jeweller who decided to buy back its own shares. But, whenever a company uses buyback strategy, it is for increasing financial ratios & confidence level, equity funding, and undervaluation of stock.
Now that board has approved the buyback of shares, it is worth Rs 4.24 billion. According to report, the shares will be bought back at Rs 350 per unit, which was Rs 209 per unit on 10th May on the Bombay Stock Exchange.
The approved buyback is of up to 1,21,14,286 fully paid-up equity shares of Rs 10 each as mentioned in the regulatory filing. The shares will be bought back from the equity shareholders in the price which set to Rs 350 per unit without exceeding the amount of Rs 4.24 billion.
And at last, the IDBI Capital Markets & Securities Limited and Corporate Professionals Capital Private Limited appointed as merchant bankers for the buyback offer.
Final Thoughts: –
Stock buyback can be considered as a defending move by PC Jeweller but in recent days, many companies are using the same corporate strategy against the undervaluation of stock, to increase return ratios.
But, Buyback is not effective as it was before. Not anymore! This corporate strategy is not enough to predict the future performance. Nevertheless, PC Jeweller is India’s leading jeweller, there must be some strategy to take such action.
By – Advisorymandi.com