MUMBAI: Jain Irrigation Systems (JISL), the Jalgaon-based agri-business company, crashed 28 per cent on Wednesday to close at a loss of Rs 19.70 on BSE, hammered for the second day in a succession. Rumours of a debt default send the scrip down on Tuesday; and Wednesday too opened lower, taking its market capitalisation below Rs 1,000 crore post an India Ratings downgrade. The stock has moved from a 52-week high of Rs 98.30.
Based on a consolidated view of JISL and subsidiaries, India Ratings cut its Long-Term Issuer Rating to ‘BBB’ with the outlook at ‘Watch Negative’. “The downgrade reflects deterioration in the liquidity profile of JISL on account of delay in the realisation of its receivables from its micro-irrigation systems segment. The RWN 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,” it said.
JISL had earlier tried to assuage market fears, saying it has not defaulted on any of its debt obligations, and that it expected receivables to improve after elections. The firm’s debt is around Rs 4,561 crore, and it had reported a revenue of Rs 8,600 crore for the year ended March 2019, and a net profit of Rs 239 crore. Moreover, it said there are orders in hand worth Rs 5,000 crore.
“Investors are at the receiving end; dividend paying cos are witnessing free fall due to systemic issues in the market. They are being punished for reasons other than fundamentals of the business,” said Deven Choksey, MD, KR Choksey.
Companies with high leverage, high promoter share pledges are getting punished in the market – JISL has 48 per cent of promoter shareholding under pledge. But, there are also other issues that have kept Dalal Street worrying. JISL would exit the derivatives segment this month with the expiry of existing contracts after regulators decided to force around 40 stocks out of F&O to curb excess volatility. After fall in share prices, another aspect to worry about now is lenders’ action on fall in collateral value.