Shares of Jain Irrigation Systems soared 12 per cent to quote Rs 28 per share on the BSE on Monday, recovering almost 72 per cent in the past two trading sessions, after the company clarified to the exchanges regarding the sharp fall in its share price. The stock of the plastic products company hit multi-year low of Rs 16.30 on Thursday, June 20.
“Unabated and unprecedented significant fall in share price is not linked to company’s current or expected performance but may be linked to exit of company’s stock from future & options (F&O) and/or negative sentiments born out of speculative operations fuelled by rumours,” it said in regulatory filing on June 20.
In April, the National Stock Exchange (NSE) issued a list of 34 securities, which included Jain Irrigation, to be removed from derivatives from June 28, as they failed to meet the criteria laid down by the Securities and Exchange Board of India (Sebi) and exchanges.
Between May 30 and June 19, the scrip tanked 64 per cent as compared to 2 per cent decline in the S&P BSE Sensex.
The stock touched its lowest level since August 2004, after rating agency India Ratings and Research (Ind-Ra) downgraded the company’s long-term issuer rating to 'IND BBB' from 'IND A-' with negative outlook.
"The downgrade reflects deterioration in the liquidity profile of the company on account of delay in the realisation of its receivables from its micro-irrigation systems (MIS) segment. The rating watch reflects the risk of delay in the company’s deleveraging plans or a further increase in its working capital requirement, resulting in further worsening of its liquidity position," the rating agency said.
Jain Irrigation, however, clarified that the management was committed to owning and running all its major business based on intrinsic value which has been created while pursuing deleveraging to reduce debt by Rs 2,000 crore as conveyed earlier.
"It will also walk the path of fiscal prudence and optimise its operations to achieve overall objective of profitable and sustainable growth. The promoters have informed the company stakeholders that they are in touch with all their lenders for pledged shares and are working on solutions for current scenario," it added.
Despite the 72 per cent rally from its recent low, the stock of Jain Irrigations is still down 70 per cent from its 52-week high of Rs 94.50 apiece touched on June 22, 2018. It hit an all-time high of Rs 252 on August 9, 2010.