Saturday, April 11, 2015

Jaiprakash Power Ventures Ltd: Buy in Bulk
CMP: Rs.10.65
You must be aware that Jaiprakash Power Ventures Ltd is selling some of its plants to bring its debt to some manageable levels. JSW Energy Ltd will acquire (100 per cent stake) two hydro-electric projects of Jaiprakash Power Ventures in Himachal Pradesh for about Rs.9,700 crore.

Earlier, Sanjay Sagar, joint managing director & chief executive officer,  JSW Energy Ltd said that the company’s deal with  JP Power will be completed by March 31 or early April  (2015)--this was their timetable. This means we are just near the final lap of this crucial deal. Meanwhile, the Competition Commission of India (CCI) approved the sale of two of Jaiprakash Power Venture Ltd’s hydropower assets to JSW Energy Ltd in February, 2015. JSW Energy Ltd had approached anti-trust regulator seeking clearance to complete the Rs.9,700 crore deal with Jaiprakash Power Ventures Ltd (JPVL). Debt for Jaiprakash Power Ventures stood at Rs.17,888 crore at the end of the September quarter.

The stock continues to be a buy on dips, as there are large upsides from interest rates in longer time frame. 

JPVL acquired Bina Power Supply Company Limited (BPSCL) from Aditya Birla Group. BPSCL was set up by the Aditya Birla Group to set up a coal fired Thermal Power Plant at Bina in the state of Madhya Pradesh.

Commissioning:

  • Unit 1 commissioned in August, 2012
  • Unit 2 commissioned in April, 2013

Besides, Jaypee Nigrie Super Thermal Power Project comprising 2 x 660 MW Super-critical Unit is likely to be the only plant to make reasonable ROE for JPVL. 

The investors should therefore, do well to buy the scrip of the company at the CMP of Rs.10.65 (Book Value: Rs.21.54 and Market Cap: Rs.3,137.79 Cr) and wait for its to close above Rs.15.50, for some scintillating returns going forward. 
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