It broadly looks like a long-term call for JP Associates. The stock itself is been in a controversy for the last one month or so. The stock has corrected 50% from its peak. Now after the 50% correction, a couple of foreign brokerage have come out with a buy report from both, CLSA and Merrill Lynch. Both are of the view that the stock has corrected enough and it’s come into a comfort zone where they can put in a buy. There are strong triggers for the stock to go up and recover the lost grounds over the next couple of months, they are basically putting a buy on this stock.
CLSA has come out with a report saying that it’s a strong buy according to them. They’ve mentioned couple of triggers for which the stock may go up from current levels. One is the value unlocking which will happen in the power business, plus the kind of money they will recover from selling their assets close to the Taj corridor. So these are the two basic triggers, according to CLSA, for which they have put in a buy on the stock.
Merrill Lynch has also come out with a strong buy. In fact they have reinitiated a buy on the stock post the 50% correction. According to them too there is a potential 83% upside on the stock from current levels and even to them the rational is very clear.
Though all these controversies were created after the Merrill conference wherein the management was not clear about the holding structure, now that is clarified by the management, not only to us but also to the broking community. It’s very clear now that JP Infratech, which will be doing business for Taj Corridor and Ganga Express Highway, will be 100% part of JP Associates. It will not be sold to any other company or to the promoter group company.
Link to the article: http://www.moneycontrol.com/india/news/business/most-brokerages-putting-a-buy-call-on-jp-associates/328016
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