JSPL gains on divestment of majority stake in Jindal Power

Jindal Steel & Power (JSPL) rose 1.49% to Rs 448.90 after the company accepted a binding offer from Worldone, to divest its 96.42% stake in Jindal Power (JPL), a material subsidiary of the company.

The divestment is in line with JSPL's strategic objective to continuously reduce its debt, focus on its India Steel business and significantly reduce its carbon footprint by almost half as part of its ESG objectives. The equity value is an all-cash offer of Rs 3,015 crore for 96.42% stake in JPL, including 3,400 MW (mega-watt) coal fired power plants in Chhattisgarh and other non-core assets owned by JPL.

V.R. Sharma, the managing director of JSPL, said: "This divestment is in line with our ESG objectives to be amongst the top 10 lowest Co2 emitting steel companies of the world. It is yet another step towards our vision to reduce debt substantially and create a robust balance sheet for our investors and stakeholders. Looking to the future, JSPL will be a key growth driver in the Indian steel industry and will now focus on undertaking expansion of its Angul steel plant from 6 MTPA to 12 MTPA. Infrastructure spending in India is bound to grow exponentially and JSPL is fully aligned with GoI's vision of achieving 300 MTPA steel production by 2030. We firmly believe in the India growth story and its potential to be an engine of global growth."

The share purchase agreement dated 26 April 2021 executed between the company, the acquirer and the target company. The long stop date for completion of the proposed sale is 12 months which may be mutually extended by the parties thereto, failing which the proposed sale shall terminate.

Worldone is a private company owned by the promoter group, and managing & holding investments across various listed and unlisted companies. Worldone is a part of the promoter group of the company. Naveen Jindal (chairman of the board and a promoter of the company), holds, along with his relatives, the majority equity share capital of Worldone.

On a consolidated basis, JSPL's net profit stood at Rs 2,566.68 crore in Q3 FY21 compared with net loss of Rs 218.57 crore in Q3 FY20. Net sales jumped 39.6% to Rs 10539.10 crore in Q3 FY21 as against Rs 7547.29 crore in Q3 FY20.

JSPL is an industrial powerhouse with a dominant presence in steel, power, mining and infrastructure sectors.

The JSPL scrip hit a 52-week high of Rs 455.95 in intraday trade today.

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