What happened in Vakrangee?
On 25, Jan 18 Vakrangee Ltd. purchased 2M shares of PCJ at 561.71 from open market as part of their treasurer policy. This raised a lot of concern among investor of Vakrangee and they started demanded clarification for equity investing in PCJ.
On 28, Jan 18 Mumbai Mirror published an article which says that Vakrangee is under SEBI radar for the alleged share price, volume manipulation. This article brought a lot of attention among investors and they became very much septical about Vakrangee.
Vakrangee also has given clarification on the article published on Mumbai mirror.
On 30, Jan 18 Vakrangee prices slumped up to 20% but recovered later on and closed on -7%. From 31, Jan 18 the stock is continuously locked into a lower circuit and fallen up to 62% from its 52 week high.
Story of PC Jewellers
Vakrangee has mentioned PCJ as one of their business partner in their investor presentation.
When the news related to Vakrangee was published by Mumbai Mirror, the investors suspected may be PCJ is also manipulating its price and volumes.
On 2, Feb 18 shares prices of PCJ crashed up to 52% but later recovered and closed at -21%.
After effects on PCJ
When PCJ share prices crashed up to 52% in a single day, the management became proactive and conducted an investor conference call the same day before market closing. This is a very vigilant activity which management did in order to regain investor’s confidence. They clarified that they do not have any business partnership with Vakrangee and their company is following all guidelines mentioned by SEBI.
After effect on Vakrangee
Vakrangee has said that investment in PCJ was part of treasurer policy. Due to various questioning by shareholders the company have modified its treasurer policy which now bars it to do direct equity investment.
BloombergQuit also connected with the MD of Vakrangee so that investor could know some whereabout of the company. LINK
Now comes the part whether the company still holds PCJ shares which were purchased by them earlier. This remains an unknown fact and company management has not given regarding the same. One interesting thing that allegations against share price and volume manipulation were declined by SEBI on 9, FEB 18. SEBI has given a clean chit to Vakrangee.
Due to the above fact, on 9th Feb, 17 Vakrangee share was locked in upper circuit. But this could be a trap for retail investors.
Vakrangee’s MD Interview
Does this make Vakrangee good for investment?
Vakrangee has faced multiple allegations of price and volume manipulation over the course of 10 years. One interesting thing to note that none of the allegations was proved and everytime the company came out with a clean chit. Another thing to note that in spite of such a fall, the management never bothered to engage a conference call on an urgent basis. They conducted an investor meetup on 6, Feb 18 which already very late and investors lost half of their money. But the company remains a suspect from an investor point of view and retail investor should not burn their hard earned money by investing in such companies.
Is PCJ good for Investment?
One thing is very much clear that PCJ management is very active and they want do want to make sure their investor to remain confident on the growth trajectory of the company. As management has already denied their partnership with Vakrangee, therefore, the investor should not be pessimistic to invest in the company.
Currently, PCJ is available at a discount and an investor should always look for such opportunity to arrive. But I would like to draw attention that If Vakrangee is still holding 2M shares of PCJ then they have to offload them before the end of this financial year. The reason for offload is clear by the fact they have changed their treasury policy which doesn’t allow to do direct equity investment.
The share prices of PCJ may fall in future and an investor should be mentally prepared with this fact. Therefore an investor could get better entry point in PCJ if Vakrangee decides to offload the PCJ shares in open market.
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