JP Associates Q1: Here's what to watch out for

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26 Aug, 2025 12:21

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Jaiprakash Associates' first quarter profit after tax is likely to grow by 4.6% year-on-year to Rs 112 crore from Rs 107 crore. Net sales during the same period are expected to increase 6% to Rs 3,335 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are seen going up by 11% to Rs 819 crore in the quarter ended June 2012 from Rs 737 crore in a year ago period. EBITDA margin too is seen improving to 24.6% versus 23.5% during the same period.

But year-on-year results are not comparable as as the south and west based cement plants have been de-merged from the parent company with retrospective effect. So it is likely that the company will restate last year’s results accordingly.

In the previous quarter (Q4FY12), company had demerged its cement operations in Andhra Pradesh and Gujarat into a separate entity with a plan to divest a minority stake to PE firms. JP Associates is looking for sale of the Gujarat plant at around Rs 6,000 crore.

Analysts feel the repayment and servicing of large debt is a key concern for the company. Net debt as of March 2012 stood at Rs 42,500 crore.

E&C segment

Analysts expect slight dip in revenues due to completion of Yamuna Expressway and Karcham Wangtoo Project. This segment should witness decline in profitability sequentially due to seasonal nature of execution activity.

Company’s current EPC order book consists of around Rs 3,000 crore of Hydro Projects.

Cement business (contribute 40% to total revenues) is expected to drive profitability in the first quarter.

Overall revenues are expected to remain flattish, but analysts expect higher realizations (up around 6% to 8%).

However, volumes are expected to decline by around 5% due to hive off seen in cement capacities.

Capacity (South & West based plants) amounting to 9.8 million mt (25% of total cement capacity) was hived off into a subsidiary.

Cement profitability is expected to be robust at EBITDA of Rs 1,028 / tonne due to the demerger of the relatively less profitable plants

Real Estate business

Analysts feel the real estate may continue to improve performance driven by project completions

Investors should watch out for announcement of any stake sale (company is looking to divest stake in Jaypee Cement), debt levels and the corresponding interest costs.

Analysts expect tax levels to remain higher and revert to 33% levels in Q1FY13 as against 9.1% in the previous quarter.

FCCB repayment concerns

Company has USD 354 million of zero coupon FCCBs due in September 2012. FCCBs are deeply out of money at conversion price of Rs 165 while current market price stands at Rs 62 a share.

Factoring in a conversion premium of 47%, amount due on September 2012 is estimated to be USD 522 million while cash on the books was USD 370 million.