According to Macquarie, the divestment of stake in 11 road projects could lead to deleveraging benefits.
Sadbhav Engineering shares rallied 2.6 percent in morning on Tuesday after global research house Macquarie said it expects 71 percent potential upside in the stock on likely divestment in road projects.
The brokerage said an asset sale would be key to a re-rating for the stock. Hence, it has maintained outperform rating with a target price at Rs 374 apiece.
According to the research house, the divestment of stake in 11 road projects could lead to deleveraging benefits.
"Proceeds could be utilised to pay back loan to Sadbhav Infrastructure Projects and could help bridge equity financing for under-construction road projects," Macquarie said.
Last month, the Financial Express quoting unnamed sources said Sadbhav Engineering (SEL) confirmed it is expecting to sell a chunk of its roads portfolio in its subsidiary Sadbhav Infrastructure Project (SIPL).
"Due diligence with respect to traffic growth is in advanced stages for 12 of its toll road projects. According to sources, the Canadian Pension Plan Investment Board (CPPIB) is among those locked in discussions with SEL," the report added.
CPPIB declined to comment, saying they do not remark on market rumour or speculation while company also had clarified that it had not executed any agreement to sell 12 road projects and the above news is incorrect.
At 10:30 hours IST, the stock was quoting at Rs 223.35, up Rs 5.30, or 2.43 percent on the BSE.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
