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Jaypee Infratech
Overweight
JYPE.BO, JPIN IN
4Q11 comes in below expectations. Toll road project
delayed given land acquisition issues
• 4Q11 results- JPIN reported 4Q11net income of Rs 2.5B (-34% Q/Q,
182% Y/Y) below our estimate of Rs 3.2B. The earnings miss was
primarily driven by lower than expected EBITDA margins of 46% (vs.
72% run rate for 9MFY11). This was on account of higher contribution of
built up property vs. plotted sales. Tax rate during the Q was also higher at
25%. During the Q, JPIN reported a dividend of Rs 0.5, taking the full
year dividend to Rs 1.25 (yield 2.2%). Full year revenues and PAT
improved 34%/194% respectively.
• Sentiment to remain negative on account of land acquisition issues-
Over the last few days there have been agitations by farmers against UP
government’s land acquisition policy especially around the expressway
project. Correspondingly opening of Yamuna Expressway has been
delayed to Jul-12 against the earlier indicated timeline of 3Q-11. As per
the co., this is primarily on account of delay in handing over of land by
YEA. Even the cost of the project seems to have been revised upwards
given Rs98.5B has already been incurred on the project till date as against
the total project cost estimate of Rs97.4B earlier. Farmers are primarily
demanding higher compensation for their land.
• Key B/S highlights- During the year JPIN’s net debt increased by Rs 5.
4B. Adjusting for IPO proceeds of Rs 16.1B, company generated negative
FCF of Rs 21.5B. This was primarily driven by construction of toll project
(Rs 20B) and land acquisition for Real Estate. However with capex on
both toll road and land acquisition largely done, FCF generation should
start improving FY12 onwards. This should also aid improvement in
payout ratios (JPME 30% for Fy12) going ahead.
• Earnings cut- We reduce our sales assumptions by 1 msf for FY12/13 and
delay toll road collections to start F14 (6 months delay vs. new guidance).
Our EPS for FY13 now reduces by 4%. (No effect on FY12). The
reduction in earnings is muted as we were forecasting losses on toll road
operations (given higher interest/ depreciation) in the first few years of
operations. The stock is now trading at a FY12 P/E EPS of 6x.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jaypee Infratech
Overweight
JYPE.BO, JPIN IN
4Q11 comes in below expectations. Toll road project
delayed given land acquisition issues
• 4Q11 results- JPIN reported 4Q11net income of Rs 2.5B (-34% Q/Q,
182% Y/Y) below our estimate of Rs 3.2B. The earnings miss was
primarily driven by lower than expected EBITDA margins of 46% (vs.
72% run rate for 9MFY11). This was on account of higher contribution of
built up property vs. plotted sales. Tax rate during the Q was also higher at
25%. During the Q, JPIN reported a dividend of Rs 0.5, taking the full
year dividend to Rs 1.25 (yield 2.2%). Full year revenues and PAT
improved 34%/194% respectively.
• Sentiment to remain negative on account of land acquisition issues-
Over the last few days there have been agitations by farmers against UP
government’s land acquisition policy especially around the expressway
project. Correspondingly opening of Yamuna Expressway has been
delayed to Jul-12 against the earlier indicated timeline of 3Q-11. As per
the co., this is primarily on account of delay in handing over of land by
YEA. Even the cost of the project seems to have been revised upwards
given Rs98.5B has already been incurred on the project till date as against
the total project cost estimate of Rs97.4B earlier. Farmers are primarily
demanding higher compensation for their land.
• Key B/S highlights- During the year JPIN’s net debt increased by Rs 5.
4B. Adjusting for IPO proceeds of Rs 16.1B, company generated negative
FCF of Rs 21.5B. This was primarily driven by construction of toll project
(Rs 20B) and land acquisition for Real Estate. However with capex on
both toll road and land acquisition largely done, FCF generation should
start improving FY12 onwards. This should also aid improvement in
payout ratios (JPME 30% for Fy12) going ahead.
• Earnings cut- We reduce our sales assumptions by 1 msf for FY12/13 and
delay toll road collections to start F14 (6 months delay vs. new guidance).
Our EPS for FY13 now reduces by 4%. (No effect on FY12). The
reduction in earnings is muted as we were forecasting losses on toll road
operations (given higher interest/ depreciation) in the first few years of
operations. The stock is now trading at a FY12 P/E EPS of 6x.
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