After underperforming the broader markets for the past year, shares of Jaiprakash Associates Ltd have shown some positive momentum. In the past five sessions, the stock gained 16% compared with a 3.5% rise in the Nifty.

One reason is the growing buzz about the sale of its cement plants. In a recent meeting with analysts, the company said it was confident about selling its stake in a Gujarat cement plant in the coming weeks.

With debt at more than 45,370 crore and finance costs eroding most of the company’s operating profit, it is taking steps to cut debt. At the consolidated level, the management is aiming to reduce the debt by 6,000 crore-6,500 crore in the current fiscal year. It is targeting 4,000 crore from selling the cement mill in Gujarat and an additional 2,000 crore from land at its Jaypee Infratech Ltd unit. Moreover, it has decided to stop fresh capital expenditure, according to an ICICI Direct note.

These steps may not be enough.

The management is betting on revival of its key businesses. The company is hoping to sell 21% more, or 28 million tonnes (mt) of cement, which contributed more than two-fifths of the revenues in the nine months ended 31 December. With stagnant macroeconomic conditions and construction activity remaining low, analysts doubt if the company can achieve robust growth in cement sales. Edelweiss Securities Ltd is forecasting sales of just 25.4 mt.

The much publicized Yamuna Expressway, too, is slow in achieving scale. Against the initial estimate of 300 crore, toll collection is low at 120 crore-132 crore a year. The management now is pinning its hopes on improvement in residential and commercial activity in the Greater Noida–Agra belt. As traffic improves, it expects the toll collection to double in two years.

Orders at the construction division, meanwhile, are drying up as investments in infrastructure came to a standstill. According to Anand Rathi Research, excluding real estate, order book at the construction division, the second biggest revenue contributor after cement, may have fallen below 4,000 crore in the last fiscal year from 4,700 crore in 2011-12.

To be sure, the company is expected to benefit from commencement of its Mandla coal fields and Nigrie thermal power plant. Fly ash from the Nigrie plant is expected to help reduce input costs at cement plants, while coal from Mandla blocks will secure supplies to the cement business.

However, for the company to substantially reduce debt from its balance sheet, cement and construction have to pick up. Only then can the rally in its shares sustain.