Adani Transmission jumped 3.9 per cent in early trade on Monday after the company said that it has signed a share purchase agreement with Essar Power to acquire a 100 per cent stake in Essar Power Transmission Company (EPTCL). The acquisition is in line with the company’s value-added growth strategy through organic as well as inorganic growth opportunities. The acquisition cost is Rs 1,913 crore.
Adani Transmission’s scrip quoted a 52-week high and 52-week low of Rs 3000.0 and Rs 860.5, respectively. At the prevailing price, the stock trades at 181.24 times its trailing 12-month earnings per share of Rs 10.95 per share and 26.32 times its price-to-book value, the exchange data showed.
“The acquisition of Essar’s transmission asset will consolidate ATL’s presence in central India. With this acquisition, ATL is well on the path to achieve its 20,000 ckt km target before time. We continue to remain at the forefront of grid stability and provide sustainable, reliable, and affordable energy solutions while creating long term sustainable value for our stakeholders,” ATL MD & CEO Anil Sardana was quoted as saying in a PTI report.
The sale is a part of deleveraging strategy following which Essar has repaid over Rs 1.8 lakh crore to banks and financial institutions in the last three years – the largest debt repayment in its history, PTI reported.
Essar Power Transmission Company Ltd (EPTCL), a unit of Essar Power, has 465-km transmission lines across three Indian states. The asset transacted is an operational 400 kV inter-state transmission line linking Mahan to the Sipat pooling substation.
The project operates under the CERC regulated return framework and was commissioned on 22 September 2018. The proposed transaction will be executed through transaction steps which shall be subject to necessary regulatory approvals and other consents.
Adani Transmission Ltd said the “acquisition is in line with ATL’s value-added growth strategy through organic as well as inorganic growth opportunities. With this acquisition, the cumulative network of ATL will reach 19,468 ckt kms, out of which 14,952 ckt kms is operational and 4,516 ckt kms is under various stages of execution. Further, with this scale of operations, ATL will derive synergies in terms of O&M cost optimization and shared resources.”
“It will also fortify its position of being the largest private sector transmission and distribution company in the country. The asset will be operated in line with ATL’s operational excellence framework committed to the highest standard of Environment, Social and Governance (ESG) aspects,” the company said.
Commenting on the stock, Manoj Dalmia, Proficient Equities Limited, said: “Adani Transmission has recently seen a sell-off for the last 1 month. The major reasons include FII selling due to profit-booking, high valuations, and rising interest rates. Its current PE ratio is around 180 whereas sector PE is about 10. Also recently Adani stocks have come under SEBI scrutiny being FII’s favourite hence such negative sentiments. The recent acquisition of Essar Power Transmission is in line with its value-added growth strategy, which makes it fit for long-term accumulation. The stock currently has no particular trend and might enter a consolidation state any closing below Rs 1,831 might take it to Rs 1,665 levels.”
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