Shares of grounded Jet Airways on Thursday shot up by 137 per cent from intra-day low to close at Rs 64 amid huge short covering even as the National Company Law Tribunal (NCLT) admitted the bankruptcy petition filed by State Bank of India.
The stock spurted 186 per cent to hit an intraday high of Rs 77.35 after hitting a record low of Rs 27 (down 33.1 per cent intra-day) in the morning session on the BSE. The stock ended the day at Rs 64.00, up Rs 30.90 or 93.35 percent on the BSE.
NCLT on Thursday decided to admit the insolvency petition against Jet Airways filed by its creditors and appointed a Resolution Professional in an attempt to salvage their exposure of around Rs 8,500 crore. The insolvency process will allow lenders led by State Bank of India to sell the company as a whole or sell its assets and bring to an end weeks of uncertainty over the airline’s future. The tribunal has also appointed Ashish Chhauchharia of Grant Thornton as the Resolution Professional (RP) for the airline that stopped operations on April 17. The tribunal directed the RP to try and finish the resolution process in three months even though the RBI norms allow six months for resolution.
SBI had made a claim of Rs 967 crore in the petition. The petition, however, rejected the please of two operational creditors and vendors.
According to brokers, there were huge short positions on the counter, which will not be available for trading in the F&O segment from the July series.
“There was heavy short coverings on Thursday. Investors who short sold the shares in the last a few days, bought back the stocks to square up their positions,” said a dealer. In the last 13 trading days, shares of Jet Airways tumbled 78 per cent. On June 18, the scrip plummeted 40.78 per cent to close at Rs 40.45 on the BSE. “Traders were short selling the shares, anticipating more bad news. The stock won’t be available for trading in F&O segment from July series,” said a market source.
After a meeting of the 26 lenders on Monday, SBI in a statement said that “after due deliberations, the lenders have decided to seek resolution for Jet Airways under the bankruptcy code since only a conditional bid was received”. The fate of the airline, which shut down operations on April 17, 2019 after it ran out of cash, will be decided as per June 7 circular of the Reserve Bank.