Jaiprakash Associates shares in red on plans to shelve sale of Gujarat cement biz

MUMBAI: Jaiprakash Associates continued to remain under selling pressure for the second consecutive session after its subsidiary Jaypee Cement shelved plans to sell its Gujarat cement unit.

According to Ashutosh Kumar, Joint President (Marketing), Jaypee Cement, the company did not get the right valuation and hence the plans for selling the Gujarat unit was shelved.

"We were in discussions with some parties. But, as of now we are comfortable in terms of cash position. So, we are not selling any of our cement units," Kumar said.

"Jaiprakash Associates was expected to raise Rs 40 billion through this sale which could have lowered its D/E to 3.5x from 3.9x. JPA was trying to sell this unit for last 1 year. This news is negative for JPA as the company would not be able to save interest cost as expected. We lower our FY14F EPS by 5 per cent. However we maintain BUY on the stock as recent decline of 20 pe rcent factors in this negative news. The stock is available at 1x book," Kim Eng India research report said.

The stock has corrected over 8 per cent in the last two trading sessions.

At 10:10 a.m.; the stock was at Rs 57.80, down 1.53 per cent, on the BSE. It touched a high of Rs 58.40 and a low of Rs 57.10 in trade today.