Hold Jaiprakash Associates; tgt Rs 77: Firstcall Research

Firstcall Research has recommended hold rating on Jaiprakash Associates (JAL) with a target price of Rs 77 in its March 04, 2013  research report.

"JAL is the engineering and construction arm of the Jaypee group focused on development of river valley and hydro electric projects since 1996. During the quarter, the robust growth of Net Sales is increased by 3.80% to Rs. 34308.70 millions. Jaiprakash Associates has raised Equity Funds to the extent of Rs. 532.90 crores by allotment of 6,42,04,810 equity shares of Rs. 2/- each at an issue price of Rs. 83/- per share to Qualified institutional Buyers through QIP issue of USD 100 million. During the quarter FCCB aggregating USD 3,96,00,000 have been converted onto 2,84,45,567 Equity Shares of Rs. 2/- each at a predetermined price of Rs. 77.50 per share. Jaiprakash Associates entered into a JV Agreement with Madhya Pradesh State Mining Corporation Ltd for Coal Mining at Amelia Coal Block in Madhya Pradesh. Jai Prakash acquired Bina Power Supply Company from the Aditya Birla Group to set up a 1500 MW coal fired thermal power plant at Bina in Madhya Pradesh. The company has won two contracts by Mangdechhu Hydroelectric Project Authority, Bhutan for construction of the two contract packages pertaining to 720 MW Mangdechhu Hydroelectric Project.

The company's net profit decreased to Rs.1109.30 million against Rs.2049.50 million in the corresponding quarter ending of previous year, a decrease of 45.87%. Revenue for the quarter increased 3.80% to Rs.34308.70 million from Rs.33053.90 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.0.51 a share during the quarter, registering 46.59% decrease over previous year period. Profit before interest, depreciation and tax is Rs.8809.80 millions as against Rs.9380.00 millions in the corresponding period of the previous year.

Outlook and Conclusion: At the current market price of Rs.67.75, the stock P/E ratio is at 27.38 x FY13E and 35.16 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.2.47 and Rs.1.93 respectively. On the basis of EV/EBITDA, the stock trades at 8.50 x for FY13E and 8.12 x for FY14E. Price to Book Value of the stock is expected to be at 1.14 x and 1.10 x respectively for FY13E and FY14E. We recommend ‘HOLD' in this particular scrip with a target price of Rs 77 for Medium to Long term investment," says Firstcall Research report.

Public holding more than 90% in Indian cos

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