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)
India to receive normal rains, not surplus, as La Nina chances fade
MUMBAI/NEW DELHI India will receive normal rainfall over the 2016 monsoon season, not surplus as previously expected, with the chances of a La Nina weather pattern emerging over the period seen as unlikely, three senior officials at state-run weather department said.
Piramal to partner Bain Capital for distressed-debt investment
MUMBAI Piramal Enterprises Ltd said it would partner Bain Capital to invest in distressed assets, becoming the latest entrant in the space as the nation's banks are on a drive to clean up $120 billion of sour debt.
China takes aggressive steps to fend off banking, financial risks
BEIJING/SHANGHAI China took aggressive steps on Wednesday to head off signs of growing risks in its financial and banking system, unveiling detailed rules to curb an unruly peer-to-peer (P2P) lending sector and intervening in its money markets.