Jai Corp share price saw a sharp decline on Thursday, January 2, plunging to its 52-week low of ₹247.90, after hitting the 20% lower circuit limit, accompanied by heavy trading volumes.
The decline followed an announcement by Jai Corp that Urban Infrastructure Holdings Pvt. Ltd. (UIHPL), in which it holds a 32% stake, has called an extraordinary general meeting (EGM) to seek shareholder approval for a proposed capital reduction.
This marks the third consecutive session of losses for Jai Corp stock.
The capital reduction by UIHPL is subject to approvals from its shareholders, the National Company Law Tribunal (NCLT), and other regulatory authorities. Upon approval and implementation, Jai Corp is expected to receive approximately ₹364 crore from the transaction, as noted in an exchange filing.
"The board of UIHPL proposes to reduce 99.76 per cent of its share capital, including equity shares and fully compulsorily convertible preference shares (CCPS), on a proportionate basis. The company plans to pay an aggregate consideration of ₹3,746.87 crore to its shareholders for the capital reduction," the filing stated.
Jai Corp also disclosed that the capital reduction proposal includes a provision to increase the consideration payable, ensuring UIHPL retains sufficient cash reserves for its daily operations. This additional consideration will also be distributed proportionately among its shareholders.
This development comes after Dronagiri Infrastructure Private Limited (DIPL), a subsidiary of UIHPL, sold its 74 per cent equity stake in Navi Mumbai IIA Private Limited (NMIIA) for ₹1,628.03 crore.
The stake has been acquired by Reliance Industries, which the company disclosed on December 13, 2024. CIDCO kept its remaining 26% stake.
Following the sale, DIPL has proposed its capital reduction, citing excess funds beyond operational needs. If approved at DIPL’s EGM, UIHPL stands to receive a minimum of ₹1,492.50 crore as part of the reduction process. The payout could increase depending on the interest earned on DIPL’s surplus cash, which may also be distributed to UIHPL as part of the consideration.
In addition, DIPL has already returned ₹1,597 crore of the promoter’s equity contribution to UIHPL, further bolstering its financial position.
In September 2024, Jai Corp completed a buyback of 2.94 million equity shares through the tender offer route at ₹400 per share. The buyback, conducted on a proportionate basis, saw the promoter and promoter group tendering 1.95 million shares, reducing their stake by 1.09 per cent.
Post today's decline, the stock is now over 43 per cent away from its 52-week high of ₹438.00, hit in July 2024.
In 2024 the stock lost over 36 percent, giving negative returns in nine of the 12 months. Just in the first two sessions of January, the stock has shed 24 per cent, extending losses after a 10.6 per cent fall in December. However, it rose 10 per cent in November but prior to that, the stock declined for four straight months between June and October.
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