Macquarie maintains underperform rating on the stock with a target of Rs 27.30. Despite recent steps by the company on de-leveraging, Macquarie believes much more needs to be achieved for the company.
Shares of JP Associates fell over 3 percent intraday on Wednesday after its losses further widened in December quarter. Its net loss widened to Rs 116.09 crore for the quarter ended December 31, 2014. The total income from operations during the quarter came down to Rs 2,583.35 crore, from over Rs 3,163.64 crore in the same quarter of the previous financial year.
Morgan Stanley says collapse in the real estate division led to weakness in revenue and margins. The EBIT margin fell 670 basis points Y-o-Y to 22.9 percent for the quarter, the lowest level in the last seven quarters. Given the pain across divisions, the company reported its worst quarterly EBIDTA margins in a decade at 16.3 percent (down 720 bps Y-o-Y) in Q3 FY15, resulting in a decrease of 43 percent Y-o-Y in EBITDA.
Macquarie maintains underperform rating on the stock with a target of Rs 27.30. Despite recent steps by the company on de-leveraging, Macquarie believes much more needs to be achieved for the company to have a comfortable balance sheet position. It is negative on the cement business due to heightened competition from existing players and new capacity additions.
“The numbers have given more reasons for us to be worried as reported EBITDA is less than half of the interest burden. The sale of assets undertaken by the company is a much required step, but we believe it is not enough to stop the hemorrhage. It needs a sharp turnaround in cement cycle to salvage the situation,” Macquarie says in a note.
At 12:50 hrs Jaiprakash Associates was quoting at Rs 23.45, down Rs 0.45, or 1.88 percent on the BSE.
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