JP Power shares hit 5% upper circuit limit on this update; details here

Shares of Jaiprakash Power Ventures Ltd (JP Power) on Monday hit the 5 per cent upper circuit limit at Rs 20.03 on BSE. The stock rose after Vedanta Ltd was identified as the highest bidder to acquire the assets of Jaiprakash Associates Ltd (JAL) under the insolvency process with a bid of Rs 17,000 crore.

JP Power is the profit-making power arm of debt-laden JAL. The resolution plan is yet to be finalised as the committee of creditors (CoC) is expected to take about two months before giving its approval.

According to brokerage Nuvama Institutional Equities, Vedanta's move to acquire JP Associates' assets may weigh on its stock valuations as the acquisition marks an entry into unrelated businesses. The brokerage, however, retained its 'Buy' rating on Vedanta, noting that it would wait for the resolution plan to be finalised before factoring it into earnings estimates.

Nuvama said the transaction would require NCLT approval, which could take another 8–10 months. Vedanta would then need to make an upfront payment of Rs 4,000 crore. While the brokerage expects Vedanta to focus on its core power business, it noted that other assets acquired may be monetised over time.

The brokerage termed the event negative for minority shareholders, citing concerns over Vedanta's debt and focus on deleveraging. It added that the Rs 17,000 crore funding requirement could weigh on the balance sheet, though monetisation of assets might provide some relief.

The asset portfolio of JP Associates includes 4,000 acres of land in Delhi-NCR, a 2,200 MW thermal power plant (under JP Power where JAL holds 24 per cent), a 10 MTPA cement plant, a 0.72 MTPA urea plant, five hotels, and EPC businesses.

Nuvama noted that Vedanta is likely to retain the power plant due to synergies with its existing operations, while other assets may be monetised in the medium term. It also pointed out that the bid is unconditional, meaning Vedanta would bear any liabilities, including those related to ongoing litigation with the Yamuna Expressway Industrial Development Authority over unpaid dues.