Jaiprakash Associates' intention to reduce debt likely to improve investor sentiment

Jaiprakash Associate's focus on debt reduction than further expansion is likely to improve investor sentiment in its stock. A High debt has been a concern for investors and has resulted in a lacklustre performance of the stock since the last two years.

The company's management recently indicated that it is looking for a debt reduction of nearly Rs 6000 crore by the end of FY14. It expects to clear Rs 2000 crore debt by the way of monetization of the land parcels of its Subsidiary - Jaypee Infratech.

Jaypee Infratech, operates the Yamuna Expressway. It has a right to collect toll on the expressway for 36 years. Besides, it is also entitled to development rights for developing 6,000 acres of land spread across five regions along the expressway. The company has so far monetized only one of the six land parcels. It intends to monetize nearly 13 million square feet FY14.

In addition to this, the company is also planning to sell stake in its cement plant in Gujarat, which is approximately valued at Rs 4000 crore.

As of September 2012, it had a consolidated debt of Rs 46000 crore. With lower debt, the company's cash flows are set to improve in the near future.