Jet Airways share price sprang a surprise today after days of thrashing after the ailing airline found itself stuck in muddy waters of debt trap invoking lenders to approach insolvency court to recover their dues. Jet Airways share, which hit a fresh 52-week low of 27 in trade today rebounded 133% amid short covering to hit an intra day high of 77.35 on BSE. The sudden rise in Jet Airways stock comes ahead of an order to be passed by National Company Law Tribunal (NCLT) on insolvency plea filed by country's largest lender SBI. The order is expected to be passed at 5 pm today.
After falling for the last 13 sessions, Jet Airways share price closed 93.35% or 30.90 points higher at 64 level compared to the previous close of 33.10 on BSE. In last 13 sessions, Jet share price has lost 78%. The stock opened at a loss of 8.76% at 30.20 on BSE.
On NSE, Jet Airways share closed 122.21% or 40 points higher at 73.55 compared to the previous close of 33.10.
Mustafa Nadeem, CEO at Epic Research said, "There is a bounce in stock just before when the matter is going in the NCLT. The stock did jump on huge volume. When we look at the Derivatives data of Jet in Futures we believe it a merely short covering that was triggered. There is a lot of debt on the company and the list is too long. The creditors, lenders, Leasors, employees, the fleet also comprise of planes that are on rent. So we don't think there can be some big turnaround. We have seen this kind of volume before and the jump. That turned out to be a trap. It is about time that this one would also prove to be the same."
Jet Airways share price has fallen 19.74% during the last one week. The stock has fallen 80.64% during the last one year and lost 73.42% since the beginning of this year.
Lenders led by State Bank of India (SBI) had decided to take the ailing airline to bankruptcy court recover their Rs 8,500 crore dues instead of an outright sale to the lone bidder.
The once largest private sector airline, started over 25 years ago by airline-ticketing-agent-turned-entrepreneur Naresh Goyal, stopped flying on April 17 after it ran out of cash and the unpaid lessors took away most of its 100-odd operational aircraft.
A flow of negative news has hit the airline stock recently.
The Income Tax (I-T) Department has summoned Jet Airways founder Naresh Goyal for questioning in relation with an alleged case of tax invasion. This is the first time when an enforcement agency has summoned Goyal on charges of any financial irregularities in Jet Airways.
The investigation wing of the I-T Department has found alleged irregularities in transactions between Jet Airways and its Dubai-based group firms to evade taxes worth Rs 650 crore, sources told the Economic Times. The grounded airline reportedly paid commissions to its general sales agent in Dubai every year. Goyal will be asked to provide an explanation for these payments, they said.
According to the investigation report, such payments were allegedly in excess of permissible business transactions under the Income Tax Act and will not considered as allowable expenses.
On June 14, Jet Airways share price slumped after NSE said shares would be pulled out of Futures and Options trading from June 28. Jet Airways share price slumped over 23% to 84.80 level compared to the previous close of 110.40 on BSE.
On June 11, Jet Airways share price crashed amid a report that Hinduja Group and Etihad Airways may not proceed with plans to resurrect Jet Airways.
London-based Hinduja Group has decided to stop talks to buy a stake in the ailing airline, while Etihad Airways of Abu Dhabi has also stalled its plan to infuse more funds into the Mumbai-based airline, according to a report by Mint.
On June 10, two operational creditors-Shaman Wheels and Gaggar Enterprises-took it to the insolvency court National Company law Tribunal (NCLT) seeking bankruptcy proceedings against the airline. The development came at a time when banks were looking to resolve the once premier airline's debt issues outside the insolvency process.
Earlier on May 30, cash-strapped Jet Airways had said that it is not in a position to consider and approve the audited financial results for the fourth quarter of FY19.
"The results couldn't be approved in view of the ongoing bidding process undertaken by the domestic lenders for change in the management of the company, coupled with resignation by members of the board of directors, its key managerial personnel and other employees across functions," the airline said in a filing to the Bombay Stock Exchange.
Debt-laden Jet Airways, which has been grounded since 18 April due to funding woes, has seen its top executives exiting the company in the past few months, following the resignation of its founder Naresh Goyal from the board of the airline in March. Naresh Goyal and his wife Anita Goyal had resigned from the Jet Airways board on March 25, transferring the control to the lenders led by the State Bank of India.
Top five executives of the airline, including CEO Vinay Dube, already resigned from the airline citing "personal reasons". The banks appointed SBI Capital Markets as the investment banker to find an investor for the company.
Edited by Aseem Thapliyal