MUMBAI Shares of Jaiprakash Power Ventures Ltd(JAPR.NS) fell more than 16 percent on Monday on worries the power company had sold two hydroelectric power plants to a consortium led by Abu Dhabi National Energy Co (TAQA.AD) for less than expected.
The consortium, which includes Canadian institutional investor PSP Investments, agreed to spend $616 million on equity in the plants. Adding their non-recourse project debt, the total enterprise value of the deal would be around $1.6 billion, a TAQA spokesman told Reuters.
J.P.Morgan downgraded Jaiprakash Power Ventures to "neutral" from "overweight" and reduced its target price to 19 rupees from 25 rupees on Monday, saying the implied deal equity valuation was 30 percent lower than expected at $616 million.
"The risk-return trade off is no longer attractive, in our view," JP Morgan said in the research note, calling investors to switch to Jaiprakash rival Tata Power (TTPW.NS) on which it has an "overweight" rating.
Profit-taking also played a role in the falls, traders said. Jaiprakash Power shares were down 13.6 percent at 0525 GMT, wiping out its 12.2 percent surge on Friday in anticipation of the deal.
The falls, if sustained, could also erase the power and infrastructure company's gains of 27.8 percent in February.
Parent company Jaiprakash Associates Ltd (JAIA.NS) shares also fell 4.2 percent.
(Reporting by Abhishek Vishnoi and Indulal PM; Editing by Prateek Chatterjee)