Feb 20, 2012, 05.25 PM | Source: Moneycontrol.com
Motilal Oswal is bullish on Jaiprakash Associates and has recommended buy rating on the stock with a target price of Rs 106 in its February 16, 2012 research report.
Motilal Oswal (more)
“Jaiprakash Associates, during 3QFY12, JPA reported revenues of INR33.1b (up 14% YoY), EBIDTA of INR8.2b (up 3% YoY) and net profit of INR2.1b (down 12% YoY). This is above our estimates of INR 1.4b. EBIDTA too was higher than our estimate of INR 7.0b. Better than estimated performance is driven by strong performance of Cement business, claims receipt towards group EPC project boosting EPC profits (Karcham Wangtoo, etc) and higher dividend income from Jaypee Infratech (large part of other income, attributable could be INR 1.2b+). Thus, the better than estimates were driven partly by operating performance and partly aided by one-offs.”
“Cement division volumes stood at 4.25m tons (up 17% YoY), while realisation improved by INR 765/ton and EBIDTA by INR 500/ton+ QoQ, leading to EBIT of INR 1.7b, vs negative EBIT of INR 295m in 2QFY12. EPC business too recorded higher margins at 30%, owing to claims receipt. EBIT for division stood at INR 3.7b, vs INR 2.7b YoY. Real estate division however saw bit moderation with revenues of INR 3.1b (down 28% YoY), while EBIT stood at INR 1.5b (down 50% YoY) prior claims boost EPC margin: E&C revenues at INR 12.5b, flat YoY; as several large scale projects are competed, near completion (Yamuna Expressway, F1 circuit, Karcham Wangtoo, etc). Margins in E&C however stood at 29.8% (up 840bp YoY), and was higher than estimates.”
“We have upgraded our FY12/13E earnings estimate for JPA by 8% and 25%, respectively to factor in superior performance for Cement business (FY12/13E), one-off gains in EPC division and higher other income (FY12E). We value JPA on SOTP and arrive at TP of INR 106/sh, comprising of: Cement business at INR 75/sh (6x FY13E EV/EBIT and balance capacity at USD110/ton), EPC business at INR 39/sh (8x FY13E EV/EBIT), Jaiprakash Power at INR 38/sh (based on our TP of INR 46/sh), Jaypee Infratech at INR 30/sh (based on our TP of INR 55/sh), other Real Estate (Jaypee Greens, Land at NOIDA, etc) at INR 11/sh less net debt on books (less of cash, investment valued at BV in other subsidiaries) at INR 87/sh. Maintain Buy,” says Motilal Oswal research report.
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