JP Associates, JP Power Soar on New Deal with JSW Energy

Shares in Jaipraksh Group soared on Friday as Jaiprakash Power Ventures (JPVL) has stroke a new deal to sell three of its power assets to JSW Energy.

Shares in both JP Associates and JP Power were traded with nearly 10 per cent gains in the morning trade.

JPVL has signed a binding memorandum of understanding (MoU) with Sajjan Jindal controlled JSW Energy to sell three of its operating power plants with an aggregate capacity of 1,891 MW.

The three power plants are Baspa II plant having 300 MW capacity, Karcham Wangtoo plant with 1,091 MW capacity and Bina thermal plant with 500 MW capacity.

This is JPVL's third attempt to strike a deal to sell its power assets. Earlier the company has made  unsuccessful attempts to sell its hydel power assets to Abu Dhabi electricity company TAQA and billionaire Anil Ambani owned Reliance Power.

Jaiprakash Group has been trying to sell its assets to pay off its huge debt. Jaipraksh Group has a total debt of around Rs 60,000 crore on its books, which represents a debt to equity ratio of 6.8 times. It means against every one rupee of equity it has Rs 6.8 of debt which has made it difficult to service its debt. Its annual interest cost is 1.1 times its ebitda.

JP Associates shares have fallen over 40 per cent and shares in JP Power have fallen nearly 15 per cent in last one month as against 0.13 per cent loss in Nifty in the same period.

As of 9.55 a.m. JP Associates shares traded 6 per cent higher at Rs 27.30 whereas JP Power shares were up around 9 per cent at Rs 12.75. However shares in JSW Energy were down nearly 2.21 per cent at Rs 70.70.