On Friday, Jaiprakash Power Ventures Ltd (JP Power) shares dropped under strong selling pressure, down 8.5% to Rs. 19.80 on the BSE. The drop follows a sharp two-day rally that lifted the stock almost 29%, due to high expectations regarding Jaypee Group developments.
According to analysts, today’s decline appears more like a natural pause rather than a breakdown. Market experts point out that JP Power has a history of sharp, news-driven rallies followed by equally fast pullbacks.
Harshal Dasani, Business Head at INVAsset PMS, noted that the sell-off “looks more like the market catching its breath.” He added that the recent rally had pushed the stock ahead of its fundamentals, making some profit-taking “almost mechanical.”
He believes the decline is driven largely by short-term traders selling positions rather than long-term investors losing confidence.
Strong volumes supported this view: nearly 1.34 crore shares had changed hands by mid-morning on the BSE, compared with a two-week average of 1.75 crore.
The recent rise in JP Power was fueled by a major update from its associate company, Jaiprakash Associates Ltd (JAL). Creditors approved Adani Enterprises’ takeover proposal for JAL under the Insolvency and Bankruptcy Code, with Adani securing 89% of creditor votes.
Since JAL owns about a 24% stake in JP Power, investors anticipated that a financially stable sponsor like Adani could eventually unlock value for JP Power. This narrative powered the stock’s sharp upward move.
Adding to the noise, JP Power recently disclosed that its Non-Executive Chairman, Manoj Gaur, was arrested by the Enforcement Directorate under PMLA provisions.
The company clarified that the matter was unrelated to JP Power’s operations and pertained to legacy issues at Jaypee Infratech and JP Associates.
Technically, the stock remains strong. It trades above all major simple moving averages (5-200 days), and its 14-day RSI at 63.81 suggests it is cooling off from overbought territory.
Analysts such as Ravi Singh from Mastertrust believe JP Power could still move toward Rs. 25 in the near term, with support seen at Rs. 19.
From a valuations perspective, JP Power’s P/E is around 18.8, P/B of 1.16, and a five-year return of 710% highlight both improved performance and elevated expectations.
The firm reported Rs. 182.10 crore profit in Q2, nearly flat year-on-year, with income rising to Rs. 1,478.49 crore.
Also Read: JP Power Share Price Climbs 7.4% to Rs. 21.77 After Creditors Approve Adani Bid
JP Power’s decline appears to be a healthy consolidation phase following a two-day rally. While excitement around the Jaypee Group’s restructuring boosted sentiment, JP Power’s own operational turnaround remains a longer-term story.
Until clearer evidence of improvement emerges, investors should expect continued volatility.