Jet erases early gains, stock down over 8 pc on profit-booking

MUMBAI: Surrendering initial gains, shares of Jet Airways today tanked over 8 per cent on profit-booking in line with the overall weak stock market trend.

After surging 7.95 per cent to Rs 445 in intra-day trade, the stock pared the gains and ended 7.70 per cent lower at Rs 380.45 on the BSE.

At the NSE, the scrip settled at Rs 377.25, down 8.21 per cent from its previous close.

"Over the past two trading sessions, Jet shares have gained 22.38 per cent in anticipation of FIPB clearance. Hence, profit-booking was expected," said CNI Research, CMD, Kishor Ostwal said.

The controversial Rs 2,058 crore deal under which Abu Dhabi based Etihad will hold 24 per cent stake in Jet Airways yesterday got the approval of the Foreign Investment Promotion Board (FIPB) with major riders to maintain effective Indian control over the airline.

Under the conditions set by FIPB, Jet will have to seek prior government approval to make any changes in the Share Holders Agreement (SHA) with Etihad or any change in share-holding of the company.

The conditions also include that all shareholder disputes and disputes under SHA would have to be adjudicated under Indian law as opposed to English law as was proposed in the revised SHA submitted just before the FIPB meeting. Any other arbitration can happen under English law.

Etihad would now have two seats on the 12-member Jet Board instead of three previously proposed. The Indian partner, Naresh Goyal, besides appointing four board members, would have the right to nominate the Chairman, whereas Etihad would appoint a Vice Chairman.

The 12-member Board would have four Directors from Jet, two from Etihad and six independent directors.

In the broader market, the BSE benchmark Sensex ended the day at 19,348.34, down 244.94 or 1.25 per cent.