Jain Irrigation slumps on equity dilution worries

Jain Irrigation Systems slumped 15.23% at Rs 162.30 at 14:08 IST on BSE on equity dilution worries after the company last week unveiled its plan to raise about Rs 700 crore from qualified institutional placement.

The announcement to raise fund via qualified institutional placement was made after trading hours on Thursday, 27 January 2011. The stock has dropped 29% in four session from a recent high of Rs 228.60 on 25 January 2011.

Meanwhile, the BSE Sensex was down 300 points, or 1.63%, to 18,028.52.

On BSE, 25.30 lakh shares were traded in the counter as against an average daily volume of 1.97 lakh shares in the past one quarter.

The stock hit a high of Rs 195.40 and a low of Rs 156.10 so far during the day. The stock had hit a record high of Rs 264.57 on 9 August 2010 and a 52-week low of Rs 142.40 on 5 February 2010.

The stock had outperformed the market over the past one month till 31 January 2011, falling 9.18% compared with the Sensex's 10.64% decline. The scrip had, however, underperformed the market in past one quarter, sliding 17.46% as against 8.51% decline in the Sensex.

The mid-cap micro irrigation systems maker has an equity capital of Rs 76.24 crore. Face value per share is Rs 2.

The proposal to raise about Rs 700 crore from qualified institutional placement, if fructified, would result in potential dilution of 11.31%.

The company also intends to set up a non-banking finance company to finance farmers' needs. The company, the world's second largest micro irrigation systems maker by sales, currently aids farmers in sourcing credit to buy its products. There are also government subsidy schemes for the same.

Jain Irrigation Systems' net profit rose 24.6% to Rs 71.47 crore on 9.9% increase in net sales to Rs 693.26 crore in Q3 December 2010 over Q3 December 2009.