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Integrated Infrastructure play…
Infrastructure conglomerate with presence across verticals
• JAL is a diversified infrastructure conglomerate with presence
across cement, power, real estate and EPC verticals
• JAL has emerged as the leading cement player by expanding its
capacity to currently ~26 MTPA in FY11, significantly expanding
its market share from 4.4% in FY05 to 7.6% in FY11
• JPVL (JAL subsidiary) is the largest private hydropower player
• JAL is also executing a 165 km six lane Yamuna Expressway.
Along the expressway, it has also got real estate development of
530 million sq ft providing significant monetisation opportunities
• JAL has strong construction capabilities especially in hydropower
projects. The company enjoyed 54% share in the Xth Five Year
Plan hydropower projects
Going ahead
• JAL expects to increase its cement capacity to 35.9 MT. Such a
massive capacity addition would increase its market share from
~7.6% currently to ~10% over the next four or five years
• JAL is aggressively adding capacity in its power division and is
expected to add another ~5800 MW by FY15E, which should lead
over 10x growth in JPVL earnings.
• JAL has so far monetised its Yamuna Expressway land parcel
very well. It has sold the land bank worth ~| 9200 crore (~31
million sq ft till December 2010) and has already collected | 4136
crore. We believe the collection from existing pre-sales and new
pre-sales would significantly improve Jaypee Infratech’s free cash
flow over the next few years
• In the construction division, JAL enjoys significant construction
opportunities from its in-house power and real estate projects
(power projects plans of 13720 MW and real estate development
plans of 695 million sq ft)
Valuation
At the CMP, the stock is trading at 22.2x FY11 earning estimates and 1.7x
FY11 P/BV. With the significant expansion in the power, cement and real
estate development, we expect JAL’s earnings to grow exponentially over
the next five years. Furthermore, JAL is the only player that provides
exposure in infrastructure across the value chain (material, developers
and EPC capabilities).
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