In February month, market had witnessed one of the most volatile sessions. But Friday’s session of March was just different. It seems that March month could be a recovery month for market. In most of the sectors, investors were building bullish trades in most of the stocks. Pharma, IT, Banking etc were among the top active segments on Friday. Stock specific was also the top themes.
However, one group that remain in focus yesterday was Jaypee Group. In early morning, news of Jaypee Infratech helped all the Jaypee Group stocks to get a closing at higher levels. As per media reports, JSW Group has become the highest bidder for Jaypee Infratech, a defaulter which is on sale now. However, interesting part in this bidding for acquiring Jaypee Infra is that Jaiprakash Associate ( promoter of Jaypee infra ) is also participating. JSW has bid for around Rs 9,900 crore which is a very positive news for both investors of Jaypee Infra and its lenders.
Still good to buy Jaypee Infra?
Jaypee Infra is one of the bright future NPA companies identified by RBI last year for the Insolvency Proceeding. It has most of the Businesses linked to high growth opportunities. Inside Jaypee Infra, there is a attractive and larger land asset side comprising most of the land around Yamuna Expressway. From its Yamuna espressway, company is also earning close to Rs 250 crore in a year. Beside this, company is also in Real estate business which carries huge opportunities. Construction business is also a important part of the company. However, short-term negative affect of Real Estate business cause the main problem for the company. So, in Short, it would not be wrong to say that Jaypee Infra is a good company if we removes NPA/Loan payment issue. And therefore, I think if ownership of Jaypee Infra really changes, then it would be a great news for Investors. But until any final decision, we have to wait for some time.
Should you buy JP Power now?
Jaiprakash power or JP Power is also in the process of selling its assets to other firms. Even now, No final decision has been taken on asset sale, as per knowledge. Still, company is finding buyers for its some of the power assets. But it is true that JP Power has never been referred to NCLT even after continues losses which is a positive point. JP Power also has a great future because it is working in the field of renewable energy i.e Hydropower. However, sometimes Water availability causes power generation capacity of the company which is natural.
Earlier, I had suggested to buy JP Power rather than JP Associate for a target of around Rs 10. And after going closer to this target, we have seen a reversal in stock bringing it down again to around Rs 6. So, I think those who were lucky to sell their shares in JP Power at around Rs 10 now have option of again starting a fresh buying. Financial Numbers of Quarter ended December 2017 contains nothing special. So, only a asset sale and any positive news for overall Jaypee group would be the main triggers for any rally in stock.
Jaiprakash Associate, Buy or Sell?
Jaiprakash Associate, which closed around Rs 19 by gaining more than 20 percent indicates some other inside story of the Group. I don’t think JSW bid is as positive as JP Associate reacted. I have noted that around Rs 15, stock has always got some bounce back which goes up to Rs 20. And there, stock generally starts consolidating. On friday also, stock had touch Rs 20 as a intraday high. So, it is going to be very interesting to see the overall price action in JP Associate on Monday. Also, I would not suggest to buy it at current levels as of now. You can try to wait for a clear trend indication on technicals and then can go for a trade.
So, from all the latest media reports, I think JP Associate doesn’t wants to get out from Jaypee Infra as a promoter and therefore, they are participating in Bidding. But I don’t think it would be possible for them. Most probably, the only step that promoter group can take is to jointly bid ( with other any quality company ) for Jaypee Infra. But as I know, JSW is bidding on its own. So, we have to look forward on who will get the owner ship of Jaypee Infra.
However, there is no doubt that Jaypee Infra stock is available at a very good price for long-term investors. However, I think investors who can take some risk for higher returns and can wait for atleast 6 months may also try to buy Jaypee Infra at current levels. At the same time, JP Power also looks attractive to me at current levels because risk-reward ratio is favourable now in stock. And we can easily see some good buying in JP Power soon which can raise its share price up to Rs 8 in next one month.
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