The shares of Vedanta dropped nearly 3 percent on September 8 after the company reportedly outbid the Adani Group with a Rs 17,000-crore offer for the assets of the bankrupt Jaiprakash Associates, which currently faces claims worth Rs 59,000 crore from various creditors.
Vedanta's bid is higher than that of the Adani Group in the open challenge round, CNBC-TV18 reported citing people familiar with the matter. Other suitors in the fray include Dalmia Bharat Group, Jindal Power, and PNC Infratech, who have yet not submitted any bids in the final round, the report added.
Moneycontrol couldn't independently verify the report.
Nuvama said that it is a negative development for the minority shareholders of Vedanta, and the brokerage firm remains unconvinced by the group's rationale to acquire the assets, according to the brokerage note cited by CNBC-TV18.
Vedanta is getting involved in an unrelated business when the group's priority should be deleveraging, Nuvama further stated, while adding that funding the Rs 17,000 crore itself would be difficult. “Culmination of the transaction is likely to restrict any re-rating for the stock," the Nuvama note cited by the business news channel said. Nuvama held its ‘Buy’ rating on the stock.
ICICI Securities also noted that the development was unexpected as Jaiprakash Associates’ business portfolio does not align well with Vedanta's operations, according to the brokerage note cited by Business Standard. It added that most of JP’s businesses have been making losses for years, with some being entangled in legal disputes. This makes the outlook uncertain, it further said.
Jaiprakash Power shares meanwhile jumped 5 percent to hit the upper circuit at Rs 20.02 apiece. The stock has so far gained nearly 8 percent in the past five days, and around 42 percent in the past six months. The stock currently has a P/E ratio of 17.59.
Real estate and infrastructure firm Jaiprakash Associates (JAL) was admitted to Corporate Insolvency Resolution Process (CIRP) in 2024, after defaulting on payment of loans worth over Rs 57,000 crore. Billionaire Gautam Adani-led Adani Group, Anil Agarwal's Vedanta, Dalmia Bharat and several others had submitted their resolution plans to acquire JAL through the insolvency process.
Jaypee Group's real estate holdings include high-profile projects such as the 452-acre Jaypee Greens township in Greater Noida, featuring luxury villas, apartments, and a golf course. Other assets include Jaypee Greens Wish Town Noida, a sprawling 1,063-acre township, and the Jaypee Greens Sports City, which boasts a motor racing track along the Yamuna Expressway.
The resolution process for Jaypee Group involves a committee of creditors, including major financial institutions such as the State Bank of India (SBI), ICICI Bank and Life Insurance Corporation of India (LIC). JAL owns 24 percent stake in Jaiprakash Power Ventures.
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