JP Power gets "on"

Jaiprakash Power Ventures is buzzing today as the market is happy with its another ‘sale’ news. The company has approved sale of its Bina Thermal Power Plant to JSW Energy.

This sale is to be done through sale of shareholding in a special purpose acquisition entity called Bina Power Supply Ltd (BPSL) and the JP Board will transfer the Bina Thermal power plant along with all of its assets, liabilities, contracts and deeds to BPSL.

The sale price is linked to the base enterprise value of as on 1 September 2015 of Rs.2,700 crore. The transaction is expected to be completed by May’17.

The consolidated debt of the JP Group stands at Rs.58,250 crore and that pf JP Power is at Rs.22,415 crore. This sale will obviously help bring down this debt burden.

JP Power announced its Q1FY17 numbers yesterday – it posted a net loss of Rs.196 crore with net sales dropping 38% (YoY) to Rs.750 crore.

On Monday, Jaiprakash Power reported a standalone net loss of Rs.196.16 crore in the June quarter against Rs.66.96 crore net profit a year ago, on rising costs and a slump power generation fell. The power producer said standalone net sales in the first quarter fell 37.8% to Rs.750.41 crore from Rs.1,207.40 crore a year earlier. Shares of Jaiprakash Power Ventures Ltd gained 2.88% to close at Rs.6.07 apiece on Monday on BSE, while the benchmark index Sensex lost 0.32% to close at 27,746.66 points.

The market is just happy with the sale news today and it is currently the top gainer on the BSE, up over 7% at Rs.6.50 levels. Market cap is Rs.2000 crore but it’s become a penny stock today thanks to its huge debt.