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Jaypee Infratech Limited
Analyst Meeting Highlights:
Optimistic About 2011
Quick Comment: We attended Jaiprakash Group’s
analyst day. The management team prominently
discussed Jaypree Infratech (JIL, 83%-owned
subsidiary of Jaiprakash Associates).
Central message – JIL management appeared
optimistic about business prospects in 2011: They
cited the likely commissioning of JIL’s 165-km long
Yamuna Expressway (Noida to Agra) in June-July 2011
and preparedness to host India’s maiden Formula One
race in October 2011. JIL targets Rs25 bln sales in F11,
which could scale up to Rs100 bln in the next five years.
Real estate update: Cumulatively through September
2010, JIL has sold 28.1 msf (6.77 msf in F1H11) in real
estate from its Noida land parcel at an ASP of Rs3062,
totaling Rs85.9 bln (Rs33.2 bln has been collected from
customers). It is planning to launch real estate from its
non-Noida land parcels (especially Jaganpur) on the
expressway by April 2011.
Expressway update: Execution progress is detailed in
Exhibit 2. Hitherto, JIL has spent Rs85 bln for the
Expressway project (including land cost for real estate),
out of the overall outlay of Rs97.4 bln (Exhibit 1). We
believe that the key execution parameter to track is the
extent of ‘concreting’ work finished – 44% so far (versus
20% by March 2010). Management did not talk much
about the near-term toll collections, but was confident of
high income in three years’ time.
Free cash flows: After the Expressway commissioning,
JIL seeks to use surplus cash from operations (toll and
real estate income) to pare down debt. Management
expressed uncertainty on prospects for the government’s
plans to approve the proposed Noida airport (30km on the
Expressway, which should benefit JIL’s real estate
developments). JIL believes that the growth in air traffic to
necessitate the airport will come sometime in the future.
We retain our EW rating largely in view of Noida market
risk (high and unsustainable volumes).
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