Mar 13, 2012, 10.41 AM | Source: CNBC-TV18
Jaypee Infratech can move to Rs 75 in next six months time, says SP Tulsian, sptulsian.com.
SP Tulsian (more)
CEO, sptulsian.com | Capital Expertise: Equity - Fundamental ,IPO
Tulsian told CNBC-TV18, "Immediately, after results we have seen Jaypee Group stocks correcting and since then I have been maintaining my positive view especially on Jaypee Infra followed by Jaypee Associates. Prime reason is that Jaypee Infra is all ready with its 165 Kilometer Yamuna expressway, which starts from greater Noida to Agra. The opening of the express way was pending because of the new government or elections. This express way will start soon."
He further added, "In next couple of weeks since government formation is likely to happen, they will open this project. The tranches of land it is holding is close to about Rs 6,200 acres. It is at five locations - one tranche is at greater Noida, two tranches are at Gautam Buddha Nagar, one at Aligarh and one at Agra. Around 55% of this 6,200 acres is in NCR region."
"The first tranche at greater Noida is already under development. If you see the profitability generated by the company from this for first nine months, they have posted topline of Rs 2,200 crore, bottomline of close to about Rs 950 crore. This means they are getting PAT margin of about 42%. The advantage with them is that company is in a tax free status, so they are just paying the MAT liability of about 18%. That is the reason that they are enjoying very high PAT margin."
"Going forward, the acceleration in property development will expand in other two tranches at Gautam Buddha Nagar. The company will quickly try to generate every year about Rs 1,500-2,000 crore cash flow. This express way of 165 kilometer has a concession period of 36 years."
"The entire enterprise value of the company is about Rs 15,000 crore with present market cap of Rs 6,000-6,500 crore. We have revaluation happening for real estate stocks those who are holding large chunk of land like HDIL or Indiabulls Real Estate. So, this company also has the advantage of infrastructure status and real estate. It holds large parcels, the entire possession is with them and the entire land is fully paid. Taking all this into account, the stock looks quite attractive and one can expect a price of about Rs 75 in next six months."