PC Jeweller's shares fell nearly 6% on Friday after the company announced plans to raise up to ₹1,000 crore through a Qualified Institutions Placement (QIP). The stock declined as much as 5.80% to ₹9.73 on the Bombay Stock Exchange (BSE) following the announcement made on July 16.
Key Details
The company's board approved the fundraising strategy, which will involve issuing equity shares with a face value of Re 1 each and/or other eligible securities. The QIP will be conducted in one or more tranches, according to a regulatory filing by PC Jeweller. The board also established a Qualified Institutions Placement Committee to oversee the process, including the appointment of intermediaries and finalizing the structure and pricing of the offering.
In addition to the QIP, PC Jeweller's board approved an increase in the company's authorized share capital from ₹1,310 crore to ₹1,460 crore. This change will include the creation of an additional 150 crore equity shares of Re 1 each, necessitating an amendment to the company's Memorandum of Association.
Background
Despite a recent 10% gain over the past month, PC Jeweller's share price has fallen 4% over the last six months and 43% year-on-year. However, the stock has delivered multibagger returns of 205% over three years and 257% over five years, as reported by Livemint.
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The announcement is likely to pressure PC Jeweller's stock further, as investors may react negatively to the dilution of shares associated with the QIP. The jewelry sector could also see some volatility as market participants assess the implications of the capital raise on the company's financial health. Watch for further details on the QIP structure and pricing from the company in the coming weeks.