Jaiprakash Associates shares up 180% in six months; time to book profit?

Shares of Jaiprakash Associates Ltd rose sharply in Monday's trade, pausing their two-day losing run. The stock jumped 10 per cent to hit its upper price band of Rs 19.97. At this price, the penny stock has turned into a multibagger by rallying 180.48 per cent in the last six months. The crisis-hit Jaypee Group's flagship firm's net loss narrowed to Rs 207.55 crore in the second quarter ended on September 30, 2023, as against Rs 312.21 crore on a year-on-year (YoY) basis. However, the company's losses widened on a sequential basis.

JP Associates' revenue from operations rose 28.65 per cent to Rs 1,213.61 crore in Q2 FY24 from Rs 943.34 crore in the year-ago period.

The firm recently said it has defaulted on loans worth Rs 4,258 crore, including principal and interest amount. As of October 2023, JP Associates defaulted on repayments for a principal amount of Rs 1,733 crore and interest of Rs 2,525 crore.

On technical setup, analysts largely said investors should book profits at current levels.

DRS Finvest founder Ravi Singh said, "The counter has resistance near Rs 20 level. If entering, then keep a strict stop loss placed at Rs 16. Although, risk-reward is not favourable at current levels and one should book consider booking profit."

AR Ramachandran from Tips2trades said, "Jaiprakash Associates is bullish but also overbought on daily charts and has strong support at Rs 16. A daily close above resistance of Rs 20.1 could lead to target of Rs 24 in the near term."

Ganesh Dongre, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers also advised to book profits at current levels.

The counter was trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150- and 200-day simple moving averages (SMAs). The scrip's 14-day relative strength index (RSI) came at 71.04. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a negative price-to-equity (P/E) ratio of 4.59 against a price-to-book (P/B) value of 0.78.

The scrip has a one-year beta of 1.73, indicating high volatility.

Bourses BSE and NSE have put the securities of JP Associates under the long-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

Separately, shares of Jaiprakash Power Ventures Ltd also spiked today and it was last seen trading 2.58 per cent higher at Rs 14.33. The counter is also placed under ASM by the exchanges.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

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