Accumulate Jaiprakash Asso; target of Rs 78: Prabhudas

Prabhudas Lilladher is bullish on Jaiprakash Associates and has recommended accumulate rating on the stock with a target of Rs 78, in its August 1, 2012 research report.

"Cement business revenues were up 21.8% YoY, while construction business reported a dip of 4.6%. Overall, the net revenues for JPA stood at Rs29.6bn, registering growth of 2.1%. Despatches grew by 9.1% YoY to 3.6mt and EBIT/tonne was flat at Rs629. Realisations at Rs4342/tonne were up by 11.7% YoY."

“Increasing cost has affected the margins by 170bps YoY (please note the numbers are based on our estimated cement volumes). Construction, however, on account of margin booking in some of the power plants, reported a 29.6% EBIT margin. Real Estate revenues at Rs666m reported margin of 40.4. EBITDA (Rs7.7bn) growth of 3.3% was mainly wiped out by an interest cost of Rs4.6bn which increased by 21.3% YoY. OOI of Rs445m was higher than average run rate, leading to PAT of Rs1.4bn, a de-growth of 24.6% YoY.” 

“We have reduced our FY13 PAT estimates marginally on back of higher interest cost. The stock is trading (excl. valuation of its two subsidiaries) at 11x FY13E core earnings. Maintain accumulate on declines,” says Prabhudas Lilladher research report.

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