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Tata Power shares rose as much as 3.6 Percent to INR 76.60 in intra-day trade on Monday before tapering off to close at INR 72.70, down 1.7 Percent, after the company announced on Friday that it will sell its stake in one of the two mines held in Indonesia to reduce its consolidated debt and boost cash reserves.

The divestment for $500 million, about INR 3,134.01 crore, in PT Arutmin Indonesia coal mines, is value accretive, analysts said. The firm had a debt of INR 38,047 crore and cash equivalents of INR 2,181 crore on 30.09.2013. "Even after deep discount for 15 Percent lower cost of production at Arutmin vs KPC; we arrive at a coal SPV equity value of $1,245 million, 29 Percent higher than earlier,” JP Morgan analysts said in a note. Tata Power said on Friday it will retain its stake in PT Kaltim Prima Coal, which in turn will continue to supply Tata Power's coal offtake requirements.

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