Buy Jaiprakash Associates; target of Rs 99: Angel Broking

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Buy Jaiprakash Associates; target of Rs 99: Angel Broking

Angel Broking is bullish on Jaiprakash Associates and has recommended buy rating on the stock with a target of Rs 99 in its February 15, 2012 research report.

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RELATED NEWS Hold Hindustan Unilever; target of Rs 429: R K Global Buy Puravankara Projects; target of Rs 155: PINC Research Buy Reliance Power; target of Rs 155: Emkay ALSO READ See previous views by Angel Broking See what other Experts & Brokerages are saying about Jaiprakash Asso See messages about Jaiprakash Asso Jaiprakash Asso BSE | NSE 30/05/12 Are Mutual Funds betting on Jaiprakash Asso?

Angel Broking is bullish on Jaiprakash Associates and has recommended buy rating on the stock with a target of Rs 99 in its February 15, 2012 research report.

"For 3QFY2012, Jaiprakash Associates (JAL) reported in-line performance on the revenue front but better-than-expected numbers on the EBITDAM and PAT level. This outperformance was owing to high margin in construction segment (owing to last leg of payment for completion of Yamuna expressway) and higher other income (on account of dividend from subsidiaries)."

"On the top-line front, the company's revenue increased by 12.1% on a yoy basis to Rs3,305cr, which was exactly as per our estimate. The cement segment reported growth of 37.2% yoy; however, construction and real estate revenue declined by 1.7% and 27.6%, respectively, on a yoy basis. Blended EBITDA margin came in at 24.7%, down 400bp yoy and ahead of our expectation of 21.2%. The construction and real estate segments, with EBIT margins of 29.8% and 47.9%, respectively, led to good show on the margin front. Interest cost stood at Rs448.5cr, up 32.6% yoy 10.8% qoq and marginally higher than our estimate of Rs425.1cr. Depreciation cost came in at Rs202.2cr, up 31.1% yoy and 14.8% qoq and higher than our estimate of Rs184.9cr. The bottom line came in at Rs205.0cr, a decline of 11.9% yoy and higher than our estimate of Rs69.5cr due to high other income. Other income during the quarter jumped from Rs3.0cr in 3QFY2011 to Rs120.1cr in 3QFY2012."

"We have valued JAL's cement and construction business at 6x EV/EBITDA - (Rs62.2/share) and (Rs31.2/share), respectively. We have valued its power and real estate businesses on mcap basis (giving 15% holding company discount), which contributes Rs66.1/share to our target price. The hotel segment contributes Rs0.8/share. Treasury shares (Rs7.7/share) have been valued at the current market price, whereas net debt is accounted for on a per share basis in our valuation at Rs68.6. We recommend our Buy rating on the stock with a revised SOTP target price of Rs99 (Rs88), implying an upside of 15.8% from current levels," says Angel Broking research report.

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To read the full report click on the attachment