Resolution tailwind for Jet Airways scrip
Shares of Jet Airways soared on Monday on reports that a resolution plan for the troubled carrier could be finalised this week.
On the BSE, the stock rose over 16 per cent to close at Rs 294.40 after there were reports that Etihad will raise its stake in the full-service carrier to almost 49 per cent.
During intra-day, the stock zoomed 17.15 per cent to hit Rs 297. More than 35 lakh shares were transacted at the exchange, which was above its two-week average of 8.47 lakh shares.
On the NSE, the shares rose 15.67 per cent to close at Rs 293.40 where over three crore shares changed hands.
The brisk buying in the counter came on reports that Gulf carrier Etihad will bring in additional equity to the airline beset by financial difficulties. This is expected to be taken up at a lenders’ meeting later this week.
Even as the airline has a net debt of a little over Rs 8,000 crore to a consortium of banks led by the State Bank of India (SBI), the latter is also set to restructure its loans though this could only be done after a forensic audit of the airline’s book is submitted by EY. The SBI has an exposure of over Rs 1,500 crore to the company.
While Etihad now owns around 24 per cent in the airline, the infusion could result in its stake going beyond 45 per cent. According to current norms, foreign carriers can hold up to 49 per cent in a domestic airline. This fresh infusion could also see the stake of founder Naresh Goyal coming down to just over 20 per cent.
A business news channel has reported that while Goyal may step down as the chairman, his son Nivaan Goyal may replace him on the board.
Earlier this month, Jet Airways, which has been making delayed salary payments to the staff, had said it has defaulted on loan repayments to banks.
“Payment of interest and principal instalment due to the consortium of Indian banks on December 31, 2018, has been delayed because of temporary cashflow mismatch,” the company had said in a regulatory filing.
Jet Airways is, thus, now in the SMA-0 (special mention accounts) category which are those loans that are in default for 1-30 days.
According to the RBI’s circular in February last year, if a company defaults on a payment even for a day, banks have to kick off the process of resolution. This has to be completed within 180 days.
Meanwhile, the benchmark BSE Sensex ended over 150 points lower on Monday as foreign investors cut down bets on disappointing IIP data and a weak trend in other Asian markets.
After a volatile session, the 30-share index settled 156.28 points, or 0.43 per cent, down at 35853.56, while the broader NSE Nifty fell 57.35 points, or 0.53 per cent, to finish at 10737.60. The fall was led by L&T, IndusInd Bank, PowerGrid, NTPC, TCS, ICICI Bank, Axis Bank, Hero MotoCorp, Bharti Airtel and SBI, declining up to 2.64 per cent.