At 5-year high: This power & infra stock has zoomed 146% in last one month

The stock price of GVK Power & Infrastructure was locked in the 5% upper circuit for the eight day, trading at its highest level since September 2018 on the BSE

Shares of GVK Power & Infrastructure were locked in the 5 per cent upper circuit for the eight day at Rs 10.84 on the BSE on Tuesday.

In comparison, the S&P BSE Sensex was down 0.21 per cent at 65,884.

The stock of civil construction company was quoting at its highest level since September 2018.

A combined 9.6 million equity shares had changed hands on the BSE and NSE. There were pending buy orders for a combined 5.7 million on these exchanges, data shows.

In the past one month, it has zoomed 146 per cent from a level of Rs 4.41. It has skyrocketed 447 per cent from its 52-week low price of Rs 1.98 touched on March 29.

On increase in volume, GVK Power on Monday clarified that there are no events, information, etc., that have a bearing on the operation/performance of the company, which includes all price-sensitive information, that is required to be disclosed to the Stock Exchanges. CLICK HERE FOR STATEMENT

GVK Power & Infrastructure is primarily engaged in the business of providing operation and maintenance services, manpower & consultancy services and incidental services to owners of power plants, airports and infrastructure companies.

The parent company together with its subsidiaries, joint ventures and associates are engaged in constructing and operating power plants, highway projects, exploration of coal mines and airports (discontinued operations).

Since August 11, 2023, the stock price of GVK Power has zoomed 184 per cent after the company reported a consolidated profit after tax of Rs 275.47 crore in the June quarter (Q1FY24), mainly due to lower expenses.

The company had posted a net loss of Rs 85.51 crore in March quarter (Q4FY23) and a loss of Rs 401 crore in the year ago quarter (Q1FY23).

The company’s power segment had reported consolidated profit before tax of Rs 407 crore in Q1FY24, against loss of Rs 19.35 crore in Q4FY23 and of Rs 50.92 crore in Q1FY23.

The electricity generation target (Including RE) for the year 2023-24 has been fixed as 1750 BU. that is a growth of around 7.2 per cent over an actual generation of 1624.158 BU for the previous year (2022-23).

The generation during 2022-23 was 1624.158 BU as compared to 1491.859 BU generated during 2021-22, representing a growth of about 8.87 per cent.

The ever-expanding industrialization and urbanization will primarily drive the energy demand that is forecasted to reach 405 Gigawatts of renewable energy capacity by 2030. The centre has earmarked incentives worth Rs 1.43 trillion as a financial incentive to 12 states for boosting power sector reforms for the year 2023-24, it said. 

The government has given a boost to reforms by the states in the power sector by providing financial incentives in the form of additional borrowing permissions. This move aims to encourage and support the States in undertaking reforms to enhance the efficiency and performance of the power sector, GVK Power said in its FY23 annual report.

However, on the future outlook, GVK Power said all infrastructure companies across India are facing challenging times due to their financial exposure to banks and lending institutions.

Repayment of these loans have become a real task particularly when their revenue flows are either minimal or nothing due to delays or very long gestation periods. As a result, they are unable to make loan repayments and are branded as Non-Performing Assets (NPA) by their lenders.

The situation for some companies is very bad because even though their projects/plants are completed / ready for operations, they are unable to operate due to the non-availability of natural gas/coal etc. The majority of these factors are not under the control of the management. GVK is no exception to this, it said.