CNBC TV-18 has given a ‘source based information’ that the Suryachakra Power Corporation is in talks with Orissa government for a 1200 MW power plant. This is to be done in 4 phases and the initial investment in first phase would be $300 Million.
After reading this news we were stunned. This company came out with its IPO just two months back. They currently have 40MW capacity and another 20MW coming on stream in next few months or so. For this 20 MW plants the company came out with IPO. We recommended avoiding this offer.
Now let us understand few factors. The promoters do enjoy a pathetic track record. They have done six to seven businesses till date. What ever is in fashion they would get down into that. Till date no great business success. Two companies got delisted from stock exchange due to non-compliance. Lenders have taken serious actions against them.
Once this history is over, we can look into future. This 60 MW company is talking 1200 MW power plant. It seems that other power players in India are sleeping when a 1200 MW opportunity is at the door. Already the company is into deep trouble when it comes to operational and financial performance. Taking up such a huge project is not fun.
This needs expertise that these buggers don’t have. Also the funds required is another story. The huge equity dilution cannot be avoided given the size of the project leaving less to the shareholders as the valuations are utterly adverse.
A point to note that this is just a speculative news item from CNBC, the credibility of which is a big question mark. So if you want to go for this stock…do it at your very own risk. For us, wait and watch.
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