Vedanta has reportedly emerged as the highest bidder for Jaiprakash Associates’ assets with an offer of around Rs 17,000 crore, staggered over five years. The company will first need to secure statutory approvals (CCI, NCLT, etc.), a process that could take 3–6 months. Once cleared, Vedanta is expected to make an upfront payment of Rs 3,700–3,800 crore, with the balance spread over the subsequent five years.
The move comes as a surprise, given that Jaiprakash Associates’ businesses lie outside Vedanta’s core portfolio. For now, we are not factoring this development into our estimates pending further clarity, and we maintain our BUY rating with an SoTP-based target price of Rs 530.
Jaiprakash Associate – a complex web of assets
Jaiprakash Associates (JAL) was incorporated on 15 Nov’95 in Noida. The company is the flagship company of Jaypee Group, which has diverse business interests in cement, real estate, hospitality, engineering and construction. JAL also made investments in power and fertilisers through other group companies. In terms of revenues, in FY24, JAL’s fertiliser business contributed 45%, followed by construction at 35%. Real estate was a distant third with 15% (marred by project delays and a few legal hurdles). JAL also has 24% stake (promoter) in the listed entity Jaiprakash Power Ventures, which has about 2,200MW of hydrothermal power capacity (revenues of Rs 546.2 crore and PAT of Rs 81.1 crore, as of FY25). The company also has access to about 10mn tonnes of cement capacity (partially operational). In a nutshell, JAL’s business is rather complex and exhibits a fundamental lack of synergy with Vedanta’s existing operations.
Payment terms favourable, but turnaround visibility obscure
We believe that the payment of Rs 17,000 crore is staggered over five years, starting from the date of receiving all approvals; therefore, the first instalment estimated to be Rs 3,700–3,800 crore. Vedanta may need to pay Rs 2,700–3,300 crore p.a. for the next five years – this is a favourable side of the acquisition, as it should help Vedanta manage its debt and effectively lower the NPV of the acquisition to below Rs 17,000 crore. However, most of JAL’s businesses are running in losses since several years and a few even mired in legal issues, making the path ahead foggy.
Vedanta-JAL: A strategic mismatch
Jaiprakash Associates’ portfolio appears misaligned with Vedanta’s existing businesses, especially at a time when Vedanta is pursuing a demerger aimed at offering investors a clearer choice of commodity-focused investments.
In our view, the acquisition seems premature, as though the cart has been placed before the horse. Vedanta may ultimately look to retain JAL’s power, real estate, construction, and fertiliser businesses while parting with cement and other operations, given their limited synergies—the cement plant, for instance, is distant from Vedanta’s steel and power facilities, making the use of slag and fly ash unfeasible. Key risks to our thesis include a decline in commodity prices, delays in scaling up volumes in zinc and aluminium, and further slippages in Vedanta’s aluminium backward integration projects. — ICICI Securities