Friday, November 4, 2016

Is Noida Toll Bridge Company a Good Investment Bet?

Noida Toll Bridge Company is very good company but ill conceived by its parents. It had attracted my attention an year back but I had to reject it because it has only one project under the belt. It is a project specific, special purpose vehicle company, with no scope for expansion. Therefore the fate of the company as well as the investors is forever tied-up with that single project.

Its fate is sealed as the concession to collect toll is limited to recovery of the investment and a fixed, pre-specified return, with a variable length concession period.

Recently, the Allahabad High Court has ordered the company to stop collecting the toll on the grounds that the investment and the specified return is already recovered by the company. After the order the market price of the share has been hammered.

Graph showing steep fall in the share price of Noida Toll Bridge Company Share
Graph shows the steep fall in the share price of Noida Toll Bridge Company Share

The company has gone on appeal to the supreme court.

If the company had been conceived to plan, design and execute similar projects worldwide and if the company could indeed follow such a course, it would have been a wonderful investment bet. Alas, it is not to be so.

In the end, the prospects of the company are finished.

Please do not be lured by the steep fall in the price. There may be a special opportunity in its liquidation but such bets are for experts who specialise in such special situations and not for others - not even I.

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