Jai Corp Stock Hits 52-Week Low Amid Capital Reduction Announcement by UIHPL

Jai Corp stock share price plummeted to its 52-week low of ₹247.90 on Thursday, January 2, after hitting the 20% lower circuit limit. The sharp decline comes amid heavy trading volumes following the announcement that Urban Infrastructure Holdings Pvt. Ltd. (UIHPL), where Jai Corp holds a 32% stake, is seeking shareholder approval for a proposed capital reduction.

This marks the third consecutive session of losses for Jai Corp, further extending its downward trajectory in the stock market.

Key Highlights of the Capital Reduction

• UIHPL Proposal: The board of UIHPL has proposed to reduce 99.76% of its share capital, including equity shares and compulsorily convertible preference shares (CCPS), on a proportionate basis.
• Payout to Shareholders: The company plans to distribute ₹3,746.87 crore to its shareholders, including Jai Corp, subject to approval by the NCLT and other regulatory authorities. Jai Corp expects to receive ₹364 crore from this transaction.
• Additional Provisions: UIHPL will ensure adequate cash reserves for operational needs and may proportionately distribute any additional consideration to shareholders.

Developments Impacting UIHPL and Subsidiaries

1. Dronagiri Infrastructure Sale:
   • Sale of Stake: UIHPL’s subsidiary, Dronagiri Infrastructure Private Limited (DIPL), recently sold its 74% stake in Navi Mumbai IIA Private Limited to Reliance Industries for ₹1,628.03 crore.
   • Proposed Capital Reduction: Following the sale, DIPL has proposed reducing its capital, citing excess funds. UIHPL could receive a minimum of ₹1,492.50 crore, potentially higher based on interest earnings from DIPL’s surplus cash.
2. Return of Promoter Equity:
   • DIPL has already returned ₹1,597 crore of the promoter’s equity contribution to UIHPL, further strengthening the latter’s financial position.

Jai Corp’s Recent Buyback Program

• In September 2024, Jai Corp completed a buyback of 2.94 million shares at ₹400 per share through a tender offer.
• The buyback reduced the promoter and promoter group’s stake by 1.09%.

Stock Performance and Market Sentiment

• Current Price: The stock now trades 43% below its 52-week high of ₹438.00, recorded in July 2024.
• Annual Decline: In 2024, Jai Corp’s stock fell over 36%, delivering negative returns in nine out of twelve months.
• Recent Losses: The stock has shed 24% in the first two trading sessions of 2025, following a 10.6% decline in December 2024.

Outlook

Investors are closely monitoring developments regarding UIHPL’s capital reduction and its potential impact on Jai Corp’s financial health. Despite recent declines, market experts suggest that the proceeds from UIHPL’s capital reduction could help stabilize Jai Corp’s balance sheet. However, sustained investor confidence may depend on clarity surrounding these corporate actions and future growth prospects.