There seems to be more upside in the stock of Orient Green Power Company. The company’s shares jumped 14 per cent intra-day and closed up 12.44 per cent on the NSE on reports that Infrastructure Leasing and Financial Services (IL&FS) is in advanced talks to merge its wind energy assets with the company, which will value the combined entity at ₹4,500-5,000 crore and create one of India’s largest listed wind energy companies with a capacity of 1,400 MW.
IL&FS, India’s leading infrastructure financier, will be the largest shareholder with more than 50 per cent stake, followed by Shriram Ventures and Orix Corporation of Japan.
Shriram Ventures held 22 per cent in Orient as on September 30.
The media report said that the Boards of the two companies are expected to meet soon and discuss a merger proposal. If cleared, the deal will help the entity acquire more wind energy assets and ramp up capacity to over 2,000 MW by FY18.
The exchange has sought clarification of the likely deal, though. To this, the company has replied that it is considering multiple proposals in this regard and appropriate decision will be taken at Thursday’s Board meeting. The company, which has been making losses since inception due to high interest expenses, had expressed its plans to double wind energy capacity to 1,000 MW by 2020.
Orient Green Power reported net profit of ₹82.88 crore in September 2016, compared with a net loss of ₹21.32 crore in the same period a year ago. Net sales rose 11.62 per cent to ₹154.81 crore, led by its main business — wind energy.
The company’s improvement in financial performance looks sustainable due to higher capacity leading to operational efficiencies and expected higher offtake from utilities.
Orient Green Power had said earlier that it had extended the repayment tenure of majority of its term loan portfolio in Beta Wind Farm (subsidiary of Orient Green Power) assets under the 5:25 flexible structuring scheme for a tenure of 17 years ending 2033, which will improve the cash flow situation in FY17 as well as in the years to come.
The company’s consolidated long-term borrowings stood at ₹1,919 crore as on September 30.
Orient Green Power continues to focus on reducing its debt partly by reducing some assets in biomass — its secondary business.