JP Power 'electrifies'

JP Power is a strong gainer on the bourses today, currently up almost 5% at Rs.19.85, with an intra day high at Rs.20.60.

The stock has zoomed up after the company announced that Reliance Power, through its 100% subsidiary, Reliance CleanGen has acquired JP Power’s 1800 MW hydroelectric assets, for over Rs.10,000 crore.  Reliance Power is acquiring the unit 100% and post this deal, it will become the largest provider of hydroelectric power in the private sector. Its capacity at end of current FY15 will stand at 7800 MW.

Proceeds from this sell out will be used by JP to retire some of its huge debt. Interestingly, Reliance Power is also sitting on huge debt of around Rs.30,000 crore and one wonders how will it itself reduce its own debt, while adding on more. The only solace here is that this plant of JP is already working and churning returns, so that should help service some of the debt.