Motilal Oswal is bullish on Jaypee Infratech and has recommended buy rating on the stock with a target of Rs 65 in its February 12, 2013 research report.
“JPIN's 3QFY13 PAT of INR1.6b (-61percent YoY, -14percent QoQ) was below our estimate of INR1.8b. This was primarily on account of (a) lower operating margin and (b) higher-than-estimated interest expense from the Yamuna expressway. Revenues of INR9.3b (+3.4percent YoY, +32percent QoQ) beat our estimate of INR8.2b. A sequentially better revenue booking pertains to (a) fresh contribution from pre-sales at Parcel 3 and (b) contribution from Yamuna Expressway toll for the full quarter.”
“EBITDA declined 15percent YoY (+18percent QoQ) to INR4.2b (in line with estimates). However, margin deteriorated (-5.6pp QoQ) to 45.3percent, with rising revenue mix from outside Noida projects with lower profitability. Sales weakened QoQ to 1.2msf (INR4.3b) in 3QFY13 v/s 3.02msf (INR13.5b) in 2QFY13. Average realizations declined to INR3,563/sf, against INR4,452/sf in 2QFY13. With this, 9MFY13 sales stood at INR27b (v/s est of INR39.6b in FY13). Despite weak sales, customer collections remain steady. It collected ~INR8.8b v/s INR10.3b in 2QFY13. 9MFY13 collections stood at INR27.2b (v/s FY13 est of ~INR34b). Against total pre-sales of ~INR168b (adjusted for net realizations), company collected ~INR105b (63percent of bookings) till date. This bodes positively for the quality of sales and execution progress.”
“We downgrade FY13E EPS estimate by 10percent and upgrade FY14E/15E by 7percent/2percent to INR5.4/7.8/9.8 to factor the higher interest expense and lower depreciation accounting. JPIN trades at 4.7x FY15E EPS and 0.8x FY15E BV and 45percent discount to SOTP. Maintain Buy with a target price of INR65,” says Motilal Oswal research report.
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