JSPL - Jindal Power Divestment Step In Right Direction But Funding Issues Remain: Prabhudas Lilladher
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Prabhudas Lilladher Report
Jindal Steel and Power Ltd. announced divestment of its entire 96.4% stake in Jindal Power Ltd. to Worldone Pvt., a promoter group entity, for equity value of Rs 30.2 billion.
Based on our estimates, enterprise value comes at Rs 92 billion (Rs 27 million/megawatt), considering present value of preference shares of Rs 70.5 billion (redeemable after 20 years) at Rs 40.5 billion, debt transfer of Rs 21 billion and equity component of Rs 30.2 billion.
Valuation is broadly in line with our estimate.
We believe that funding of equity component would be a concern in near term, as it could increase pledging of shares by promoter and may add unwanted risk to the stock.
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