Jaiprakash Associates Q3 profit seen down 23% to Rs 158 cr

Jaiprakash Associates is set to announce its third quarter results on Monday. Analysts on an average expect consolidated profit after tax of the company to fall by 23.1 percent year-on-year to Rs 158 crore in the quarter, according to CNBC-TV18 poll.

Total income is also expected to go down by 3.1 percent to Rs 3,202 crore from Rs 3,305 crore during the same period. However, earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 3.4 percent YoY to Rs 795 crore and EBITDA margin is seen improving by 160 basis points YoY to 24.8 percent. Note - Year-on-year earnings are not comparable due to de-merger of the cement business. Analysts expect the company to report weak numbers in the third quarter on account of weak engineering & construction (E&C) revenues, high base (led by project completion margins last year) and higher depreciation & interest costs. Analysts expect E&C revenue to fall by 25 percent YoY on completion of Yamuna Expressway and Karcham HEP and slower realty build-out at JP Infra. Meanwhile, they expect turn-around in cement business on better absorption of fixed cost by higher utilization and bottoming-out of price. Cement business is expected to witness realization pressure and cost increase (while volumes should increase). Volumes (excluding Gujarat / Andhra Pradesh) are expected to be at around 4.1 million tonnes. According to analysts, cement revenues are expected to grow by 12.6 percent year-on-year while revenues from real estate business are seen going up by 18 percent. Analysts expect 5 percent growth in construction revenues. Company has been working on disinvestment of its cement units in Gujarat and Andhra Pradesh. Funds mobilized through monetization would be utilized to deleverage. Investors should watch out for:
1) Cement realizations and update on disinvestment
2) Visibility on EPC division profitability and revenues / order book
3) Ramp-up in real estate division, revenue recognition
4) Stake sale in Gujarat cement plant to Ultratech (Company has declared its intent to exit cement plants in Gujarat and AP) Also Read: Higher subsidy burden, weak Re to weigh on ONGC's Q3 nos