Jaiprakash Associates: nfratech results read-through and UP land acquisition concerns :: JP Morgan

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Jaiprakash Associates Ltd
Neutral
JAIA.BO, JPA IN
Infratech results read-through and UP land acquisition
concerns


• Jaypee Infratech, 83% sub of JPA, missed earnings forecast for
4QFY11 by 22%. See update of Saurabh Kumar / Gunjan Prithyani
on JPIN results. The miss was mainly on
account of higher contribution of built-up property sales, which has
lower margins. JPIN accounts for 35% of JPA's consolidated FY11
EBITDA which will be reported on 14th May.
• Land acquisition protests in UP have delayed the completion of
Yamuna Expressway project to July 2012, from October 2011.
Consequently, JPIN earnings forecast for FY13 has been trimmed by
4%. This should translates into earnings cut of around 3% for JPA. This
is not in our numbers yet.
• Agitations between protestors and state government have taken a
violent turn in UP. Our cement analysts Pinakin Parekh and Neha
Manpuria are concerned about the potential impact on UP cement
demand, a very large market. UP accounted for around 39% of JPA's
FY11 dispatches. According to them, UP cement demand growth so far
has been resilient at 10% despite other North-Indian markets weakening.
Recently North/Central India cement prices have corrected by 2-5%.
They believe the current situation in UP could impact the cement pricing
environment negatively in the Northern/Central India. Cement accounts
for 25% of JPA’s FY12 consolidated EBITDA and 45% of standalone
EBITDA.