Jaypee Infratech IPO opens; should you invest?

Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

The initial public offering of Jaiprakash Associates ' subsidiary, Jaypee Infratech, opened for subscription. It has been subscribed 0.7 times so far, as per data available on the NSE website.

Jaypee intends to raise a maximum of Rs 23.5 billion (USD 530 million) through its issue. The price band for issue, which closes on May 4, is at Rs 102-117 a share.

The company is engaged in the development of the Yamuna Expressway, which is a 165-kilometre access-controlled six-lane concrete pavement expressway along the Yamuna river, with the potential to be widened to an eight-lane expressway, and related real estate projects.

Investment Advisor, SP Tulsian says issue looks quite attractive as the company has 98% paid land for realty, with road project to get completed two years ahead of its schedule with very low gearing and expected debt free status. "10% discount to retail individual bidder is an extra sweetner. Investment is recommended even at the upper band of Rs 117 per share, wherein, effective cost per share will be Rs 105.30 only."

Brokerages views

Mehta Equities in its report says, "We believe the parent company with loads of experience in the field of construction to have big boost for JIL as the execution and marketing of the projects could be done with no hassles. The Yamuna Expressway project is scheduled to get complete by 2013, but the project is on the verge of getting completed 2 years ahead of schedule. Also, JIL has managed to sell a scalable are of land and has set 10 years to construction the townships. Connectivity is expected to be further enhanced by the recent expansion of the Delhi metro to Noida, the proposed Taj International Hub Airport and a proposed aviation hub in Jewar (including the planned expansion of the Delhi metro to Jewar), and the presence of Mathura, a well-known religious pilgrimage site located along the expressway. Potential of the promoters backs the valuation. Hence, we recommend investors to subscribe."