Shares of Jaiprakash Associates fell over 23% in 5 days

Jaiprakash Associates Limited, a Noida-based construction company primarily involved in Engineering & Construction, Cement Manufacturing, Power, Real Estate Development, Hotel/Hospitality, Sports, etc., has been disappointing investors as its shares hit back-to-back lower circuits. Even today, the stock fell below Rs 20 on the BSE. If you are an investor wondering about the continuous decline in the stock price, it is essential to understand the factors contributing to this situation.

Bond Restructuring

According to the press release, the company has executed a non-binding term sheet and related accession agreements (collectively referred to as the “Term Sheet”). This includes approximately 52.52% of holders (by principal value outstanding) of the USD 38,640,000 5.75% foreign currency convertible bonds due September 2021 issued by the Company (“Series A Bonds”).

Additionally, it involves approximately 82.63% of holders (by principal value outstanding) of the USD 81,696,000 4.76% amortising foreign currency non-convertible bonds due September 2020 issued by the Company (“Series B Bonds”). The aggregate of the Bond Holders’ holding represents 70.92% of Series A and Series B Bonds. The Term Sheet contains the primary terms of the proposed restructuring of such bonds, hereinafter referred to as the “Bonds Restructuring.

Following the Bonds Restructuring, assuming all the bondholders opt for the conversion of the Series A Bonds and the Series B Bonds on the above terms, approximately 25.11 crore of Equity Shares are expected to be issued, resulting in an increase of 9.28% in the expanded equity share capital. This amounts to an addition of Rs. 50.23 crore towards the subscribed/paid-up capital of the Company and Rs. 577.65 crore towards the share premium account.

Share Performance

At the start of the day, the company’s stock opened at Rs 20.25 per share on the BSE, which was down from the last trading day’s closing price. It reached intraday highs and lows of Rs 20.89 and Rs 19.88, respectively. Moreover, during the day, it hit a lower circuit of 5%; however, it is currently out of the circuit and trading at around Rs 20.07 per share on the BSE.

The current market capitalisation of the company stands at Rs 4,926 on the BSE, and the shares have a negative 16% return in the past one month and around a 130% return in the past one year. During the past five days, it has fallen by around 22.5%.

In terms of ownership, the promoter holds 29.97%, while Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) hold 0.98% and 9.24%, respectively. The major shareholding is owned by public investors, accounting for 59.81%, as per the latest update.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.