Vedant, Jindal Power, JSW Energy, Shyam Sel and Power & Zeal Global Opportunities Fund Are Among Provisional Resolution Applicant For Power Penny Stock Under Rs 10
The stock is up by 9.6 per cent from its 52-week low of Rs 4.71 per share while it is down by 69.7 per cent from its 52-week high of Rs 17 per share.
GVK Power and Infrastructure Ltd, a prominent player in India's power sector, has been grappling with severe financial distress. On July 16, 2024, the National Company Law Tribunal (NCLT) at Hyderabad declared the company bankrupt, triggering a corporate insolvency resolution process (CIRP). This decision followed GVK's default on a significant loan of ₹18,000 crore owed to ICICI Bank and other lenders.
The CIRP is currently underway, with a provisional list of prospective resolution applicants (PRAs) released on November 18, 2024. This list includes major industry players such as Vedanta Ltd., Jindal Power Ltd., Shyam Sel and Power Ltd., JSW Energy Ltd., and Zeal Global Opportunities Fund. These companies have expressed interest in acquiring GVK Power and Infrastructure and resolving its financial challenges.
The resolution process is overseen by a resolution professional (RP) appointed by the NCLT. Stakeholders, including creditors and investors, have until November 23, 2024, to raise objections to the provisional list of PRAs. The successful resolution of GVK Power and Infrastructure's insolvency proceedings is crucial for the company's future and the overall health of the Indian power sector.
The roots of GVK's financial woes can be traced back to a decade ago when GVK Coal Developers (Singapore) Pte Ltd, with GVK Power and Infrastructure as a guarantor, availed a loan of ₹8,356 crore from a consortium of banks led by ICICI Bank. The loan was intended to fund the acquisition of coal mines in Australia. However, subsequent additional loans and a breach of facility agreements by GVK led to significant financial liabilities.
In 2022, ICICI Bank approached the NCLT to initiate insolvency proceedings against GVK Power and Infrastructure. The NCLT determined that as of June 13, 2022, GVK Power and Infrastructure was liable for a staggering ₹15,576 crore, comprising principal, interest, and agency fees.
DSIJ's ‘Penny Pick’ service provides research-backed penny stock recommendations below Rs. 100. If this interests you, do download the service details here.
About the Company
GVK Power & Infrastructure Limited is a company primarily focused on providing operational and maintenance services, manpower and consultancy services, and other related services to businesses in the power, airport, and infrastructure sectors. The company's core business segments include energy, where it operates various power plants, and transportation, where it manages the Jaipur-Kishangarh Expressway Road project in Rajasthan.
The company reported strong Quarterly Results for Q2FY25. Net sales increased by 3 per cent to Rs 390.87 crore compared to the previous quarter. Net profit surged by a significant 419 per cent to Rs 811.19 crore, compared to the same period last year. For the first half of the fiscal year (H1FY25), the company achieved a revenue of Rs 614.82 crore and a net profit of Rs 816.06 crore, representing an impressive 89 per cent year-over-year (YoY) increase.
Promoters hold a 54.25 per cent stake in the company, while public/retail investors own 44.71 per cent. FIIs and DIIs hold 0.53 per cent and 0.49 per cent, respectively. The company has a market cap of Rs 815 crore. The stock is up by 9.6 per cent from its 52-week low of Rs 4.71 per share while it is down by 69.7 per cent from its 52-week high of Rs 17 per share. Investors should keep an eye on this power penny stock.
Disclaimer: The article is for informational purposes only and not investment advice.