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JPIN’s recent reported results point to a slowdown in both sales and
execution of RE projects on the back of farmer protests in the neighboring
land parcels. While the stock has corrected sharply over the recent past
(-50% YTD CY11) and valuations look attractive (FY12E 4.5x P/E, FY12E
1x P/BV), ongoing land acquisition concerns in UP and overall weak
macro environment will likely continue to weigh on the stock performance
in the near term, in our view.
Jun-Q new bookings of Rs6B (1.3msf) were lower than FY10/11 sales
run rate with only one new project launched during the quarter (Aman
II- 1msf). Farmer protests around land acquisition in Noida extension
area and G Noida (unrelated to JPA land parcels) adversely impacted the
buyer sentiment and sales volumes in Jun-Q. Company indicated that
sales momentum has picked up in July and has kept its FY12 guidance
unchanged at Rs40B (JPMe Rs27B) with new project launches being
planned in Guatam Buddha Nagar (parcel 3) around mid Sep.
Work on Yamuna Expressway project is progressing well, according
to the company, with over 80% of concreting work already complete.
Additional capex of Rs8B was incurred on the road project during the
quarter taking the overall cost incurred till date to Rs106B (~90% of the
total cost estimate of Rs117B). We note that the cost of the project was
revised upwards by Rs20B during Mar-Q due to increased land cost & IDC.
1Q results recap: JPIN’s reported 1Q earnings of Rs2.4B (-5% Q/Q)
were below expectations, primarily due to lower-than-expected revenue
recognition (Rs6B, -14% Q/Q). Execution progress on the ongoing
projects seems to be lagging the bookings run rate seen over the last two
years (o/s order book of >Rs75B). The company expects the recognition
to pick up in 2H. EBITDA margin at 48% improved by 200bp Q/Q and
is tracking in line with te company’s guidance of 45-50% range.
Estimate and PT revisions: We revise down our FY12/13 estimates by
5%/11% as we (a) factor in delay in road commencement and higher
project cost, and b) reduce our FY12/13 pre-sales assumptions by 5-8%.
Our Mar-12 PT is revised down to Rs55 based on 10x stabilized FCFE.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JPIN’s recent reported results point to a slowdown in both sales and
execution of RE projects on the back of farmer protests in the neighboring
land parcels. While the stock has corrected sharply over the recent past
(-50% YTD CY11) and valuations look attractive (FY12E 4.5x P/E, FY12E
1x P/BV), ongoing land acquisition concerns in UP and overall weak
macro environment will likely continue to weigh on the stock performance
in the near term, in our view.
Jun-Q new bookings of Rs6B (1.3msf) were lower than FY10/11 sales
run rate with only one new project launched during the quarter (Aman
II- 1msf). Farmer protests around land acquisition in Noida extension
area and G Noida (unrelated to JPA land parcels) adversely impacted the
buyer sentiment and sales volumes in Jun-Q. Company indicated that
sales momentum has picked up in July and has kept its FY12 guidance
unchanged at Rs40B (JPMe Rs27B) with new project launches being
planned in Guatam Buddha Nagar (parcel 3) around mid Sep.
Work on Yamuna Expressway project is progressing well, according
to the company, with over 80% of concreting work already complete.
Additional capex of Rs8B was incurred on the road project during the
quarter taking the overall cost incurred till date to Rs106B (~90% of the
total cost estimate of Rs117B). We note that the cost of the project was
revised upwards by Rs20B during Mar-Q due to increased land cost & IDC.
1Q results recap: JPIN’s reported 1Q earnings of Rs2.4B (-5% Q/Q)
were below expectations, primarily due to lower-than-expected revenue
recognition (Rs6B, -14% Q/Q). Execution progress on the ongoing
projects seems to be lagging the bookings run rate seen over the last two
years (o/s order book of >Rs75B). The company expects the recognition
to pick up in 2H. EBITDA margin at 48% improved by 200bp Q/Q and
is tracking in line with te company’s guidance of 45-50% range.
Estimate and PT revisions: We revise down our FY12/13 estimates by
5%/11% as we (a) factor in delay in road commencement and higher
project cost, and b) reduce our FY12/13 pre-sales assumptions by 5-8%.
Our Mar-12 PT is revised down to Rs55 based on 10x stabilized FCFE.
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