Analysis of Jaiprakash Power Venture Limited
What are the quick views on JP Power?
Business:
Incorporated in 1994, Jaiprakash Power Venture Limited operates in coal mining, sand mining, cement grinding, and production of thermal and hydroelectric electricity. (Sector Outlook: Positive)
Power Plant Operations
A) 400 MW Vishnuprayag Hydro-Electric Plant in the State of Uttarakhand, which is in operation since October 2006.
B) 500 MW Jaypee Bina Thermal Power Plant in Distt. Sagar (M.P.) consists of two units of 250 MW each, First unit had been in operation since August 2012, and the second unit since April 2013.
C) 1320 MW Jaypee Nigrie Supercritical Thermal Power Plant (JNSTPP) in Distt. Singrauli (M.P.) consists of two units of 660 MW each, First unit had been in operation since September 2014, and the second unit since February 2015.
Capacity The company presently owns and operates three Power plants with an aggregate capacity of 2220 MW, 2 MTPA Cement Grinding Units, and a 2.8 MTPA Coal Mine.
Sales of Cement Plant:
The company’s Jaypee Nigrie Cement Grinding plant is a 2.0 MTPA cement grinding plant. However, there was no production in FY22. On 10th October 2022, company resolved to divest the plant as a part of its debt reduction plan and subsequently on 12th December 2022 a non-binding framework agreement was signed between the company and buyer for a consideration of Rs. 250 crores.
On 13th February 2023, company approved to enter into a Tolling / Lease agreement for a period of upto 7 years, with the buyer’s right to purchase the asset, on or before the 7th year at an Enterprise Value of Rs. 250 Crore. The definitive agreement in this respect is yet to be executed.
Promoters:
Promoters owns 24% stock in the company, 79% are pledged to FIs.
Fundamentals:
CAGR of Sales and Profit for the last 5 years is 12% and 40% respectively. ROE for the last five years is 0%.
Foreign Currency Convertible Bonds (FCCB):
The Co. had issued FCCB in FY10 for USD 200 million. With the consent of Lenders, a Bond Equitisation Term Sheet was executed in 2019 according to which all outstanding FCCBs were mandatory to be converted into equity shares at a conversion price of Rs. 12/- per equity share of Rs.10/- each and the entire outstanding interest due thereon was waived off.
Debt Restructuring
The Co’s debt was restructured in April 2019,
and the total debt was reduced to Rs 5,164 cr
on September 30, 2021, from Rs 11,149 crore
on March 31, 2019. Further, the Co. completed the sale of one of its non-core assets (Jaypee Powergrid Ltd) in March 2021 and used the cash consideration for prepayment of principal installments till June 2022.
Technical:
Technical indicators are neutral and moving averages (MA100, MA200) are showing “Buy” signal.
Risks:
One of the promoters group company, Jayprakash Associates Limited admitted in CRIPL under Insolvency and Bankruptcy Code,2016, yesterday. Brokerages : No coverage recently.
