Why is PC Jeweller Share Price Surging? Learn Top Reasons

PC Jeweller Ltd. was founded in April 2005 by brothers Balram and Padam Chand Gupta. Starting with just one shop in Karol Bagh, New Delhi, the company has grown significantly to become a major player in India’s jewellery industry.
 

Recently, PC Jeweller's share price has experienced a strong recovery. Over the past year, the stock has soared by 355%, making it a "multi-bagger" stock. It has delivered multiple times its original value. This growth is due to the company’s successful strategies.
 

Now, if we talk about its financial performance, in Q1 FY25, the company’s domestic sales surged to Rs. 401 crore. This marks a massive increase from Rs. 67 crore in Q1 FY24. The strong sales growth has played a key role in PC Jeweller's ongoing recovery. Also, the company has achieved significant improvements in profitability and operational efficiency. In this article, let’s study the various factors that have led to a surge in the PC Jeweller’s share price.

• PC Jeweller's share price has shown a strong recovery due to improved profitability and strong sales growth.
• The company’s EBITDA has risen to Rs. 89 crore from a previous loss.
• The company is strategically managing its debt through a One-Time Settlement (OTS) with banks.

PC Jeweller's stock price has been climbing due to strong financial recovery and improved profitability. Also, the company was able to successfully manage its debt and even make strategic expansions. Growing investor interest, especially from foreign institutional investors, further shows the company's positive outlook. For more clarity, let’s check some major factors leading to this increase:
 

• Improved profitability
  PC Jeweller Ltd. has made a strong recovery in its financial performance, particularly in its earnings. In Q1 FY25, the company’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) reached Rs. 89 crore. This is a major improvement compared to a loss of Rs. 42 crore in the same period the previous year.
  
  Additionally, its operating profit, which reflects the company’s core business performance, also recovered and reached Rs. 49 crore in Q1 FY25. These improvements clearly indicate that the company has been successful in boosting its profitability and running its operations more efficiently.

• Reduced deb
  PC Jeweller Ltd. has strengthened its financial position by strategically managing its debt. The company offered a One-Time Settlement (OTS) to 14 banks, and 12 of them have already accepted the offer, while the remaining two are still reviewing it. In this way, PC Jeweller has addressed its debt issues more effectively.
  
  Additionally, the State Bank of India, which had previously filed an insolvency petition against the company, has now withdrawn the petition. This is a significant win for PC Jeweller, as it removes a major financial threat and helps the company regain stability. Together, these developments show that PC Jeweller is successfully resolving its debt challenges.
   

• Strong retail client network
  PC Jeweller Ltd.'s strong recovery is largely due to its strong business operations and network. The company now runs 80 showrooms across 66 locations in 17 states and union territories throughout India. This helps the organisation reach a wide customer base. In addition to this extensive retail network, PC Jeweller has strong manufacturing capabilities as well.

As of September 8, 2024, PC Jeweller has a market capitalisation of Rs. 5,729.59 crores. Notably, the Life Insurance Corporation of India (LIC) holds a 1.45% stake in the company. Also, Foreign Institutional Investors (FIIs) have increased their stake from 0.93% in March 2024 to 2.57% in June 2024 by acquiring over 76 lakh shares. This increase shows growing confidence in the company's future prospects.

PC Jeweller has a high promoter holding of 54.53%. The company’s original owners hold more than half of the shares, which shows strong control and confidence in the business’s future.
 

Also, the operating leverage of the company is a healthy 4.33. For the unaware, operating leverage measures how much a company’s profits increase as sales grow. A high operating leverage of 4.33 means that for every increase in sales, PC Jeweller's profits rise significantly. This also indicates that the company is efficiently managing its fixed costs.

If we leave the turnaround and concentrate on PC Jeweller's past three years, the profits have drastically declined by 262.86%. Moreover, the company has witnessed negative revenue growth of -21.82%. This shows weak sales and declining business activity. Fundamentally, the company has a low ROE of -5.79%. This shows the company has been generating negative returns for its shareholders.