Jaiprakash Associates - Cash cows and white elephants - Kotak

Jaiprakash Power Ventures (60% subsidiary of Jaiprakash Associates) concluded the much-anticipated sale of its operational hydro plants for a consideration of ~Rs. 100 bn. Although the sale consideration was fair (in our view), it leaves JPVL with underutilized coal-based power plants that need to service a sizeable debt, leaving no room for error on project stabilization. For JPA, it further highlights its commitment to debt reduction even if at the cost of divesting cash cows. We have revised our target price for JPA to Rs. 44 (Rs. 52 previously).

Source : Equity Bulls

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