Volatility hits Jet shares after promoter pledges stake

Volatility in scrip prices hit Jet Airways, a day after its promoter Naresh Goyal pledged his entire 51 percent stake in the company to the Punjab National Bank (PNB).

The company's stock at the Bombay Stock Exchange (BSE) fell 5.76 percent in the intra-day trade at Rs.437.50 per equity share from its previous close of Rs.464.25.

However, the company's scrip ended the day's trade with marginal gains of 0.50 points or 0.11 percent at Rs.464.75 per equity share.

On Tuesday the company disclosed the development in a regulatory filing at the BSE. It said that Goyal has pledged his stake to PNB, without giving any financial details behind the move.

Last year, Abu Dhabi-based Etihad Airways had bought 24 percent stake in the airline for around Rs.2,000 crore ($379 million).

The stake sale was made possible after the government allowed foreign direct investment (FDI) from international airlines in domestic carriers.

Till then foreign carriers were not allowed to directly invest in Indian carriers for security reasons although 49 percent FDI by non-airline players was allowed.

Recently, the airline had reported a standalone net profit of Rs.70 crore from a loss of Rs.891 crore during the corresponding period of last fiscal.

The company which reported quarterly profits for the first time since 2012, was able to do so on the back of sales of its frequent flyers programme 'Jet Privilege' for Rs.1,193.78 crore.

The company has not reported an annual profit since 2008. It is betting on cost cuts and the launch of more international routes to return to profit by 2017. The quarterly profits came after six consecutive loss making ones prior to this.