The sale of the two hydropower plants was part of the Jaypee group’s strategy to reduce debt by selling assets. In the last two years, the group has sold assets worth Rs.21,000 crore.
The Competition Commission of India (CCI) has already approved the sale of two of Jaiprakash Power Venture Ltd.’s hydropower assets to JSW Energy Ltd. JSW Energy had approached anti-trust regulator seeking clearance to complete the Rs.9,700 crore deal with Jaiprakash Power Ventures.
Meanwhile, the government of India ha approved two electronic chip manufacturing plants in February 2014 at a total cost of Rs.63,410 crore. One plant will be set up by Jaiprakash Associates Ltd, with IBM and Tower Semiconductor of Israel as partners. According government sources, both the consortium are still working on their financial arrangements.
Besides, easing food prices pulled down retail inflation in March to a 3-month low of 5.17% despite unseasonal rains, renewing industry clamour for further cut in RBI policy rate to boost growth.
The World Bank has predicted a GDP growth rate of 8 per cent for India by 2017 and said that a strong expansion in the country, coupled with favourable oil prices, would accelerate the economic growth in South Asia.
In India, GDP growth is expected to accelerate to 7.5 per cent in fiscal year 2015/16. It could reach 8 per cent in FY 2017/18, on the back of significant acceleration of investment growth to 12 per cent during FY 2016-FY 2018, the bank said in its semi-annual report.
Now, with the interest rate on a downward trajectory, power tariffs remaining attractive in power-starved Northern and Southern India until FY17 and the coal costs being benign, the shares of Jaiprakash Associates Ltd (Rs.26.10) and Jaiprakash Power Ventures Ltd (Rs.10.82) are expected to move upwards, steadily. The investors are therefore, suggested to buy the stocks of the company at the CMP of Rs.26.10 and keep holding.