JP Power Shares Jump 15% — What’s Fueling the Rally in This Small-Cap Stock?

Shares of Jaiprakash Power Ventures (JP Power) soared over 15% in intraday trading on Monday, marking a second consecutive session of gains. The rally comes in response to media reports suggesting that the Adani Group, led by billionaire Gautam Adani, has emerged as the highest bidder for acquiring Jaiprakash Associates (JP Associates).

JP Associates currently holds a 24% stake in JP Power, and a potential acquisition by a financially strong and well-managed group like Adani is seen as a positive development for both companies.

Expert View on Strategic Fit

G. Chokkalingam, Founder and Head of Research at Equinomics Research, noted that an acquisition of JP Associates by the Adani Group would be a strategic fit, especially since JP Associates is involved in cement and power businesses, which align well with Adani's diversified infrastructure portfolio.

According to a report by Business Standard, the Adani Group has placed a ₹12,500 crore bid for JP Associates. Other interested bidders include Vedanta, JSPL, Suraksha Group, Dalmia Bharat, and PNC Infratech. Back in April, nearly 25 companies had expressed interest in acquiring JP Associates.

JP Assciates’ Insolvency Proceedings

JP Associates was admitted into the Corporate Insolvency Resolution Process (CIRP) by the National Company Law Tribunal (NCLT), Allahabad Bench, on June 3, 2024, after defaulting on substantial loan repayments. Creditors have submitted claims amounting to over ₹57,185 crore.

Additionally, JP Power has provided a corporate guarantee for JP Associates’ external commercial borrowing of $150 million (now a rupee term loan) from the State Bank of India, further linking the financial fate of the two entities.