The uncertainty surrounding Jet Airways' acquisition of Air Sahara has taken a toll on the former's stock, with its scrip closing at its all-time low on Wednesday, at Rs 919.15 on the Bombay Stock Exchange (BSE). The Jet Airways stock has lost nearly 19% or Rs 209.60 since January 18, 2006 when the merger deal was struck. On that day, the stock closed at Rs 1,128.90, much higher than Wednesday's close of Rs 919.15. The issue price of Jet Airways, which came out with an initial public offer (IPO) in January 2005, was fixed at Rs 1,100 per equity share.
Touching The Ground
| The Jet-Sahara deal is likely to |
make some headway today
Deal consideration of Rs 2300 cr
is overvalued, feel analysts
Jet Airways stock has lost nearly
19% since Sahara acquisition
Analysts say that the merger news of Jet and Sahara has not gone down too well with the investors with most of them fearing a further fall in the returns on investment. Nikhil Garg, an aviation analyst with Edelweiss Capital Ltd, said, "It will take around nine to 12 months for Jet Airways to turn around Sahara. Whenever Jet raises money for the deal, the earnings will come only after a year. As a result, the earnings per share (EPS) would actually fall by 10-15% in the short-term."
Analysts also feel that the deal consideration of Rs 2,300 crore was overvalued. The Jet -Sahara deal is likely to make some headway on Thursday with the top management of both the airlines planning to meet and chart out their future course of action. There had been intense speculation that Jet would back out or renegotiate the deal if the airline did not get access to all of Air Sahara's infrastructure and flying rights.