Thread by @amitmantri

The Curious Case of PC Jewellers' Trade Receivables (Thread)

Disclosure - No position in PCJ stock or derivative.

PCJ announced its Q1 FY19 results last week. In its mgmt ppt, it also disclosed partial BS information. The info showed that PCJ had reduced its total outstanding debt by over 400 crs. However, what the company didn't disclose is far more interesting than what it did disclose.

The company didn't provide its Receivables number for the Q end. Not in the ppt neither in response to analyst queries in the results concall. However, since the company has provided partial BS info it is possible to estimate what might have happened to the receivables this Q.

The only information missing from the BS was Fixed Assets, Loans and Receivables. By back-calculating from the partial BS, we find that FA+Loans+Receivables increased from 2001 crs to 2506 crs in the last Q. This is a significant jump.

Both fixed assets and loans are unlikely to have contributed to this increase as the company doesn't have large capex needs nor has a requirement to advance big loans. Therefore it's likely that receivables has seen a big jump this quarter.

A large increase in receivables from the last Qs numbers suggests an overall increase in receivable days. What's interesting though is that in the last Qs ppt, mgmt had suggested that the high receivables situation was due to one-off late payment by customers.

Mgmt had said that large payments had been received in April (417 crs) and the high March ending receivables situation was an anomaly. As per mgmt comments from last Q, receivables should have come down by a large amount in this Q. Instead it appears that receivables increased.

It's a curious situation that PCJ which was able to even provide a mid-quarter receivables update in last Qs ppt was unable to provide June end receivables number when asked by analysts.

It seems to have made great efforts to provide all BS information which showed it in a positive light and specifically leave out the problematic receivables data which might have substantially increased from the already high March number.

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