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Robust sales; project cost up
JP Infratech’s 4QFY11 earnings were inline with expectations as
execution on constructed property business picks up. Sales, at 2.6m sf for
the quarter were slightly ahead as sales held well despite pricing gains of
c.15%. 20% inflation in Yamuna expressway project cost came as a
negative surprise and has let to a NAV cut of 6%. Customer collections
meanwhile are robust and at 53% discount to NAV and 5x FY12 earnings,
stock is attractive. Maintain BUY.
Results inline with expectations
JP Infratech reported 4QFY11 net profit of Rs2.5bn, inline with expectations.
Revenues at Rs7.1bn were down 5% QoQ. With a much higher proportion of
revenues recognized accruing from lower margin constructed properties
against plotted sales earlier, Ebitda margins dropped leading to a 30% QoQ
drop in Ebitda to Rs3.3bn – though inline with expectations.
Noida pricing improved; expect new locations in FY12
Sales at 2.55m sf were inline, though down 17% QoQ, as higher pricing of
about 15% QoQ at Noida impacted volumes. Gross value sales at Rs12.4bn
were higher 20% QoQ on a better mix as well as price increases. JP is making
a beginning at other land parcels with a commercial property launch at its
Greater Noida 2 parcel in April end. Agra land parcel sales are also planned to
be started by late 1QFY12.
Project cost substantially higher; now FY12 FCF negative
JP Infra reported a net debt of Rs44.8bn for Mar11, higher by Rs13.5bn over
Sep'10 - inline with Rs13.5bn spent on expressway construction during the
period. Real estate inflows have been evenly balanced by construction
expenses as JP Infra accelerated property construction in 2HFY11. JP now
expects Rs117bn as the Yamuna Expressway project cost – Rs20bn higher
than earlier – drives 6% NAV cut. Higher costs are essentially on land
(Rs9bn), interest (Rs7bn) and contingencies. Management expects the same
to be funded by unutilized IPO inflows (Rs12bn) as well as excess property
inflows in FY12 though the same will make FY12 FCF negative.
Realty cashflows strong, Maintain BUY.
Real estate business remains strong as demonstrated by Rs48.8bn of
customer cash (45% sales) collected till Mar’11. With a final dividend of
Rs0.5/share, the payout ratio works out to 14%, lower than 20% assumed
earlier. Farmer protests near the project site may cause further delays and
cost escalation in expressway opening and we set our target price at a higher
30% discount. At 53% discount to NAV and 5x FY12 earnings, stock is
attractive. Maintain BUY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Robust sales; project cost up
JP Infratech’s 4QFY11 earnings were inline with expectations as
execution on constructed property business picks up. Sales, at 2.6m sf for
the quarter were slightly ahead as sales held well despite pricing gains of
c.15%. 20% inflation in Yamuna expressway project cost came as a
negative surprise and has let to a NAV cut of 6%. Customer collections
meanwhile are robust and at 53% discount to NAV and 5x FY12 earnings,
stock is attractive. Maintain BUY.
Results inline with expectations
JP Infratech reported 4QFY11 net profit of Rs2.5bn, inline with expectations.
Revenues at Rs7.1bn were down 5% QoQ. With a much higher proportion of
revenues recognized accruing from lower margin constructed properties
against plotted sales earlier, Ebitda margins dropped leading to a 30% QoQ
drop in Ebitda to Rs3.3bn – though inline with expectations.
Noida pricing improved; expect new locations in FY12
Sales at 2.55m sf were inline, though down 17% QoQ, as higher pricing of
about 15% QoQ at Noida impacted volumes. Gross value sales at Rs12.4bn
were higher 20% QoQ on a better mix as well as price increases. JP is making
a beginning at other land parcels with a commercial property launch at its
Greater Noida 2 parcel in April end. Agra land parcel sales are also planned to
be started by late 1QFY12.
Project cost substantially higher; now FY12 FCF negative
JP Infra reported a net debt of Rs44.8bn for Mar11, higher by Rs13.5bn over
Sep'10 - inline with Rs13.5bn spent on expressway construction during the
period. Real estate inflows have been evenly balanced by construction
expenses as JP Infra accelerated property construction in 2HFY11. JP now
expects Rs117bn as the Yamuna Expressway project cost – Rs20bn higher
than earlier – drives 6% NAV cut. Higher costs are essentially on land
(Rs9bn), interest (Rs7bn) and contingencies. Management expects the same
to be funded by unutilized IPO inflows (Rs12bn) as well as excess property
inflows in FY12 though the same will make FY12 FCF negative.
Realty cashflows strong, Maintain BUY.
Real estate business remains strong as demonstrated by Rs48.8bn of
customer cash (45% sales) collected till Mar’11. With a final dividend of
Rs0.5/share, the payout ratio works out to 14%, lower than 20% assumed
earlier. Farmer protests near the project site may cause further delays and
cost escalation in expressway opening and we set our target price at a higher
30% discount. At 53% discount to NAV and 5x FY12 earnings, stock is
attractive. Maintain BUY.
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