Losses pile up for QIP investors in JP Associates as market cap dips 64%

MUMBAI: Institutional investors who bought shares of Jaiprakash Associates, the flagship company of the debt-laden Jaypee Group under qualified institutional placements (QIPs) at Rs 70.27 a share, will take a hit with the company’s market cap eroding by over Rs 10,000 crore, or 64%, since the QIP.

Shares of JP Associates declined nearly 20% to end at Rs 25.75 on Thursday, its lowest closing in more than nine years. Citigroup sold 1.25 crore shares of JP Associates at Rs 27.34. Most institutional investors bought the stock amid the company’s announcements on asset sale and analyst ‘Buys’.

“Our conviction on JP Associates had stemmed from the company’s sound execution capability, high quality assets, expectations of earnings ramp up and it maintaining steady debt, albeit at elevated levels, leading to expansion in enterprise value and hence equity value,” said Nischal Maheshwari, head of research, Edelweiss Securities. The company raised about Rs 1,500 crore in early July through QIP at Rs 70.27 a share.