Shares of Jana Small Finance Bank extended their recovery to trade over 1% higher on Wednesday after the lender clarified that the downgrade of its promoter entity's debt has no impact on the bank.
The stock, which fell as much as 0.37% to Rs 467 in early trade, rebounded sharply and was trading 1.07% higher at Rs 473.75 later in the session.
The initial decline came after India Ratings and Research downgraded the non-convertible debentures (NCDs) of promoter entity Jana Holdings to 'IND D' from 'IND BB'/Stable following a delay in repayment and an extension of the debt tenor.
The rating agency treated the restructuring as a default under its rating criteria, reflecting financial stress at the holding company.
According to NDTV Profit, Jana Small Finance Bank said the rating action is limited to Jana Holdings and has no bearing on the bank's operations or financial health. The bank added that Jana Holdings currently owns a 16.95% stake, down from about 44% over the years.
The lender further told NDTV Profit that the NCDs have been rescheduled to provide Jana Holdings additional time to monetise its stake. It also said the restructuring was undertaken through a consensual agreement with the NCD holders, who are private equity investors.