Kalpataru Power agrees to sell unit

Shares of Kalpataru Power Transmission (KPTL) rallied 2% in early trade on agreeing to sell one of its unit to Adani Transmission.

The Mumbai headquartered power transmission towers provider has announced its decision. Accordingly, it will sell its Alipurduar Transmission (ATL) to Adani Transmission for a total Enterprise Value (EV) of about Rs 1,286 crore.

The above deal will be subject to certain adjustments on account of assets and liabilities at the time of closing of the transaction. The transaction is also subject to requisite approvals and compliances.

KPTL has infused Rs 240 crore in the ATL, which consists of Rs 190 crore equity and Rs 50 crore in sub debt. The external debt stood at Rs 850 crore. Adjusted for sub debt, KPTL will generate Rs 380 crore ( 1.97x book).

Previously, ATL asset sale was terminated post termination of agreement with CLP India (due to delay in commissioning). The management had highlighted in the 4QFY20 con call, that they expected to sell the ATL asset by July 2020.

The deal should help KPTL to reverse declining shareholder value.

From the beginning of the year, the KPTL stock has lost 46% against a drop of 15% in the benchmark index, Sensex. The shares gained 31% from the lows touched in March, while Sensex was up 20%.

On a consolidated basis, Kalpataru Power Transmission reported a 79.5% drop in net profit to Rs 31 crore for the quarter ended 31 March. Net sales rose 0.4% to Rs 3,527 crore.

KPTL, recently announced of securing orders from India, Africa and West Asia in transmission & distribution (T&D) business. KPTL’s international subsidiary has secured new T&D projects in Europe.

These new order wins help the company to consolidate its leadership position in the T&D market in India and Africa. The international subsidiary (Linjemontage) continues to gain market traction in the European T&D market.

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