Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jaiprakash Associates Ltd
Neutral
JAIA.BO, JPA IN
Cement pricing and construction margins disappoint in
4Q
• JPA 4Q standalone results came in below expectations: JPA
reported PAT Rs3B up 23.8% yoy; however, margins declined by
~460bps yoy: (1) Cement: Volumes were in line with expectations at
4.2mtpa, but pricing was flat. With rising cost, EBITDA/ton declined
by 36% yoy to Rs850/ton (2) Construction: Margin of 12.3% was
well below our estimate of 19.2% as mainly group projects got
executed in 4Q (3) Real estate: Revenues surprised on the upside due
to better realizations, but margins dipped to 48% vs. 69% in 3Q (which
was an exceptional quarter due to bulk bookings). Additionally interest
costs were higher than estimated.
• Estimate changes. We are reducing our consolidated FY12/13
estimates by 14%/ 11% on account of: 1) Parent estimate changes:
23%/ 21% decrease in PAT driven by reduced sustainable real estate
margins (44-48%) and reduced cement EBITDA (by 5-6% to
Rs860/900 per ton). We also trim our real estate volume estimates in
FY12 and expect some moderation in realization given greater mix of
bookings from Noida and the political unrest surrounding the Yamuna
expressway (booking value to decline by 20% yoy). Our sustainable
margin estimate for the construction segment ranges between 16-17%
compared to mgt. guidance of 18%. 2) JPIN estimate changes: 3.4%
reduction in estimates in FY13, for which estimates could be at further
risk to due to the ~Rs20B increase in project cost for Yamuna
expressway. 3) JPVL estimate change: 3% decline in FY12 estimate
due to 1 month delay in CoD of Karcham Wangtoo.
• JPA has underperformed markets, given concerns on the company’s
high leverage (due to ramp up in power and cement capacities) and
hence bottomline vulnerability due to operational and pricing risks. In
addition the recent political unrest surrounding the Yamuna
expressway and the run-up to UP state elections has impacted
sentiment as well. We believe these concerns would persist in the nearterm,
and maintain Neutral with PT of Rs100. Sharp dip in RE prices is
key downside risk to PT.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jaiprakash Associates Ltd
Neutral
JAIA.BO, JPA IN
Cement pricing and construction margins disappoint in
4Q
• JPA 4Q standalone results came in below expectations: JPA
reported PAT Rs3B up 23.8% yoy; however, margins declined by
~460bps yoy: (1) Cement: Volumes were in line with expectations at
4.2mtpa, but pricing was flat. With rising cost, EBITDA/ton declined
by 36% yoy to Rs850/ton (2) Construction: Margin of 12.3% was
well below our estimate of 19.2% as mainly group projects got
executed in 4Q (3) Real estate: Revenues surprised on the upside due
to better realizations, but margins dipped to 48% vs. 69% in 3Q (which
was an exceptional quarter due to bulk bookings). Additionally interest
costs were higher than estimated.
• Estimate changes. We are reducing our consolidated FY12/13
estimates by 14%/ 11% on account of: 1) Parent estimate changes:
23%/ 21% decrease in PAT driven by reduced sustainable real estate
margins (44-48%) and reduced cement EBITDA (by 5-6% to
Rs860/900 per ton). We also trim our real estate volume estimates in
FY12 and expect some moderation in realization given greater mix of
bookings from Noida and the political unrest surrounding the Yamuna
expressway (booking value to decline by 20% yoy). Our sustainable
margin estimate for the construction segment ranges between 16-17%
compared to mgt. guidance of 18%. 2) JPIN estimate changes: 3.4%
reduction in estimates in FY13, for which estimates could be at further
risk to due to the ~Rs20B increase in project cost for Yamuna
expressway. 3) JPVL estimate change: 3% decline in FY12 estimate
due to 1 month delay in CoD of Karcham Wangtoo.
• JPA has underperformed markets, given concerns on the company’s
high leverage (due to ramp up in power and cement capacities) and
hence bottomline vulnerability due to operational and pricing risks. In
addition the recent political unrest surrounding the Yamuna
expressway and the run-up to UP state elections has impacted
sentiment as well. We believe these concerns would persist in the nearterm,
and maintain Neutral with PT of Rs100. Sharp dip in RE prices is
key downside risk to PT.
No comments:
Post a Comment