Introduction
Jaiprakash Power Ventures Ltd (JPVL) is a prominent Indian company engaged in the power sector, encompassing coal mining, sand mining, cement grinding, and the generation of thermal and hydroelectric power. With a current share price of ₹19.2 and a market capitalization of ₹13,138 crores, JPVL has established a significant presence in the energy landscape. In this blog, we'll delve into the company's financial performance, key developments, and future prospects to understand its current standing.
Key Financial Metrics
| Metric |
Value |
| Current Price |
₹19.2 |
| Market Cap |
₹13,138 Cr |
| Book Value |
₹16.7 |
| Dividend Yield |
0.00% |
| ROCE (Return on Capital Employed) |
13.8% |
| ROE (Return on Equity) |
11.7% |
| Face Value |
₹10.0 |
Observations:
- The ROCE of 13.8% and ROE of 11.7% indicate efficient utilization of capital and equity to generate profits.
- A Dividend Yield of 0% suggests that the company is reinvesting profits back into the business rather than distributing dividends.
- The Book Value being close to the current market price may imply that the stock is fairly valued.
Company Overview
About
Incorporated in 1994, Jaiprakash Power Ventures Ltd operates across multiple segments:
- Power Generation: Thermal and hydroelectric power.
- Mining: Coal and sand mining.
- Cement Grinding: Operating cement grinding units.
Operational Capacity
- Total Power Capacity: 2,220 MW.
- Cement Grinding Units: 2 Million Tonnes Per Annum (MTPA).
- Coal Mining: 2.8 MTPA coal mine.
Major Operational Power Plants
-
Vishnuprayag Hydro-Electric Plant (400 MW):
- Located in Uttarakhand.
- Operational since October 2007.
-
Jaypee Bina Thermal Power Plant (500 MW):
- Located in Madhya Pradesh.
- Unit I operational since August 2012.
- Unit II operational since April 2013.
-
Jaypee Nigrie Supercritical Thermal Power Plant (1,320 MW):
- Located in Madhya Pradesh.
- Unit I operational since September 2014.
- Unit II operational since February 2015.
Key Developments
Sale of Cement Plant
- Jaypee Nigrie Cement Grinding Plant (2.0 MTPA):
- No production in FY22.
- Resolved to divest the plant for debt reduction.
- Non-binding framework agreement signed for ₹250 crores.
- Approved a Tolling/Lease agreement for up to 7 years with a buyer's right to purchase at an enterprise value of ₹250 crores.
Captive Coal Mine
- Amelia (North) Coal Mine:
- Located in Madhya Pradesh.
- Annual drawing capacity of 2.8 MTPA.
- Caters to a portion of fuel requirements for the Nigrie Thermal Power Plant.
- Balance fuel requirement met through e-auctions.
Power Purchase Agreement (PPA)
- With Madhya Pradesh Power Management Company Ltd (MPPMCL):
- Supply 65% of installed capacity at tariffs set by MPERC.
- Supply 5% of actual generation at variable cost on behalf of the Government of Madhya Pradesh.
- Remaining capacity sold as merchant power.
Debt Restructuring
- Significant Debt Reduction:
- Debt reduced from ₹11,149 crores in March 2019 to ₹5,164 crores in September 2021.
- Sale of non-core assets like Jaypee Powergrid Ltd contributed to debt repayment.
- Focused on prepayment of principal installments to reduce financial burden.
Financial Performance
Quarterly Performance
| Quarter |
Sales (₹ Cr) |
Operating Profit (₹ Cr) |
OPM (%) |
Net Profit (₹ Cr) |
EPS (₹) |
| Jun 2022 |
1,820 |
628 |
35% |
242 |
0.35 |
| Sep 2022 |
1,385 |
256 |
18% |
75 |
0.11 |
| Dec 2022 |
1,201 |
10 |
1% |
-217 |
-0.32 |
| Mar 2023 |
1,380 |
221 |
16% |
-41 |
-0.06 |
| Jun 2023 |
1,708 |
521 |
31% |
192 |
0.28 |
| Sep 2023 |
1,350 |
411 |
30% |
69 |
0.10 |
| Jun 2024 |
1,755 |
790 |
45% |
348 |
0.51 |
Observations:
- Sales Growth: The company has maintained steady sales with some fluctuations due to operational factors.
- Operating Profit Margin (OPM): Improved significantly in recent quarters, reaching 45% in June 2024.
- Net Profit: Returned to profitability after a dip in December 2022 and March 2023.
Annual Performance
| Year |
Sales (₹ Cr) |
Operating Profit (₹ Cr) |
OPM (%) |
Net Profit (₹ Cr) |
EPS (₹) |
| Mar 2021 |
3,302 |
1,158 |
35% |
366 |
0.53 |
| Mar 2022 |
4,625 |
1,113 |
24% |
108 |
0.16 |
| Mar 2023 |
5,787 |
1,116 |
19% |
59 |
0.09 |
| Mar 2024 |
6,763 |
2,237 |
33% |
686 |
1.00 |
| TTM |
6,810 |
2,505 |
37% |
843 |
1.23 |
Observations:
- Sales Increase: Consistent growth in annual sales, indicating strong market demand.
- Profitability: Significant improvement in net profit and EPS, especially projected for FY2024.
- Operational Efficiency: Enhanced OPM reflects better cost management.
Debt and Restructuring
- Borrowings: Reduced from ₹11,149 crores in Mar 2019 to ₹4,246 crores in Mar 2024.
- FCCBs Conversion: Outstanding Foreign Currency Convertible Bonds converted into equity, reducing debt obligations.
- Interest Expenses: Decreased interest payments due to debt reduction have positively impacted profitability.
Shareholding Pattern (September 2024)
- Promoters: 24.00%
- Foreign Institutional Investors (FIIs): 7.78%
- Domestic Institutional Investors (DIIs): 18.29%
- Public: 49.94%
- No. of Shareholders: 23,97,337
Observations:
- Stable Promoter Holding: Consistent at 24%, indicating confidence in the company's future.
- Increasing FII Holdings: Rise from 1.02% in Dec 2021 to 7.78% in Sep 2024, showing growing foreign investor interest.
- High Public Shareholding: May lead to increased liquidity in the stock.
Peer Comparison
| Company |
Market Cap (₹ Cr) |
P/E Ratio |
Div Yield (%) |
NP Qtr (₹ Cr) |
Qtr Profit Var (%) |
Sales Qtr (₹ Cr) |
ROCE (%) |
| NTPC |
4,12,302.36 |
19.25 |
1.82 |
5,506. |
|
|
|
07 | 12.33 | 48,520.57 | 10.47 |
| Power Grid Corp | 3,08,082.28 | 19.62 | 3.40 | 3,723.92 | 3.52 | 11,006.18 | 13.21 |
| Adani Power | 2,32,785.80 | 14.57 | 0.00 | 3,912.79 | -55.33 | 14,955.63 | 32.25 |
| Tata Power Co. | 1,45,020.50 | 39.49 | 0.44 | 1,188.63 | 18.72 | 17,293.62 | 11.13 |
| JSW Energy | 1,19,608.15 | 61.38 | 0.29 | 534.16 | 79.99 | 2,879.46 | 8.59 |
| Jaiprakash Power | 13,138.08 | 8.33 | 0.00 | 348.48 | 81.89 | 1,754.70 | 13.82 |
Observations:
- P/E Ratio: JPVL has the lowest P/E ratio among peers, indicating potential undervaluation.
- ROCE: Competitive ROCE of 13.82%, showcasing effective capital utilization.
- Net Profit Growth: Significant quarterly profit variation of 81.89%, indicating strong growth momentum.
Key Strengths
- Diversified Portfolio: Operations in multiple sectors mitigate risk and provide multiple revenue streams.
- Stable Revenue through PPA: Long-term PPA ensures consistent revenue from 70% of installed capacity.
- Debt Reduction: Successful debt restructuring has strengthened the balance sheet.
- Improving Margins: Enhanced operating profit margins reflect operational efficiency.
Potential Risks
- Regulatory Risks: Changes in government policies can impact the power sector.
- Commodity Price Fluctuations: Variations in coal prices may affect operating costs.
- Execution Risk: Delays in asset sales or project implementation can impact financial performance.
Conclusion and Recommendation
Jaiprakash Power Ventures Ltd has demonstrated a significant turnaround in its financial and operational performance. The company's strategic focus on debt reduction, operational efficiency, and asset optimization positions it well for future growth.
Given the improving financial metrics, strong operational capabilities, and competitive position in the industry, investors may consider a 'Buy' or 'Hold' stance on the stock. However, it's crucial to monitor the company's ability to manage potential risks and sustain its growth trajectory.
Recommendation: Buy/Hold
Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.
