PC Jeweller Ltd's Q2FY19 standalone net profit declines 37.8% yoy to Rs94cr

The company’s standalone revenue stood at Rs1,635cr, down 37.7% yoy and 32.5% qoq.

Nov 14, 2018 10:11 IST India Infoline Research Team

PC Jeweller Ltd Q2FY19

Standalone Results Q2FY19: (Rs. in cr)

Q2FY19 YoY (%)
Revenue 1,635.08 [37.7]
EBITDA 205.80 [26.8]
EBITDA Margin (%) 12.6 187
Net Profit (adjusted) 93.72 [37.8]
***EBITDA margin change is bps

PC Jeweller Ltd’s revenue declined by 37.7% yoy and 32.5% qoq to Rs1,635cr. EBITDA came in at Rs206cr, down 26.8% yoy and 17.1% qoq. EBITDA margin expanded by 187bps yoy and 234bps qoq to 12.6%. Adjusted PAT stood at Rs94cr, down 37.8% yoy and 34% qoq.

• Q2FY19 was a period of consolidation for the company amidst a subdued market environment in the jewellery sector.
• PCJ utilized this quarter to rationalize inventory, exports business and consequently reduce overall bank exposure on the balance sheet.
• Domestic revenue declined by 16.2% yoy to Rs1,550cr as the company did not offer any promotional schemes during this quarter and instead concentrated on margins.
• The domestic gross margins improved from 14.7% yoy to 17.2%. Domestic sales contributed 95% of overall business.
• As part of continuing process of rationalization, Bangalore and Kolkata stores were closed during the quarter.
• Export revenue declined by 89% yoy to Rs85cr leading to slowdown in overall revenue growth. The export business is a credit based business and the company wants to rationalize exports business as the credit availability is getting squeezed. Exports contributed only 5% of overall sales. The company is targeting to limit the export sales to Rs2,000cr in FY19E (as against Rs2,690cr in FY18). Export revenue in H1FY19 stood at Rs892cr.
• Cost of goods sold stood at 83.3% of revenue vs. 86.7% yoy, aiding in EBITDA margin expansion. Overall gross margin improvement is on account of higher contribution of domestic business.
• Other expenses stood at 2.3% of sales vs. 1.8% yoy.
• Finance cost grew by 23.5% yoy to Rs98cr impacting the profitability of the company.
• As committed, the company has reduced its overall banking exposure by Rs805cr in H1FY19 (Rs4,490cr as on March 31, 2018 to Rs3,685cr as on Sep 30, 2018).
• Total cash on books as on Sep 30, 2018 was Rs804cr and the company proposes to utilise ~Rs500cr of cash and internal accruals for further reduction of bank exposure in H2FY19.

Technical View:

PC Jeweller Ltd is currently trading at Rs. 86.55, down by 3.4 points or 3.78% from its previous closing of Rs. 89.95 on the BSE.
The scrip opened at Rs. 90.15 and has touched a high and low of Rs. 92 and Rs. 84 respectively. So far 2,85,67,983 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.

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