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Noida woes
JP Infratech’s Noida sales volumes halved in 1Q as poor sentiment
following Noida land agitations impacted sales at the end of the quarter.
Earnings were also slightly below expectations on slower than expected
revenue recognition. With UP elections stated for 1QFY13, we push out
our sales estimates from new land parcel by an year, as well as cut Noida
sales volumes. Cash flow improvement post road completion and stock
trading at 60% discount to NAV and 5x earnings makes it attractive.
1Q results slightly below on weaker revenues
JP Infratech reported 1QFY12 net profit of Rs2.4bn, 5% below estimates on
weaker revenues. Revenues at Rs6.2bn were down 14% QoQ/+3% YoY – but
weaker as new projects take longer than expected time to enter revenue
recognition. Ebitda margins improved 2ppt QoQ, a positive surprise, leading
to a smaller drop in Ebitda to Rs3.0bn.
Sales half QoQ as Noida issues hit sentiment
While we build in lower sales in Noida as JP curtails supply; sales at ~1.3m sf
were lower than expected, down 50% QoQ. Pricing, at c.Rs4,600/sf, was up
c.45% YoY as JP sold a better mix/took price increases early on in April. The
volumes dropped for the company in June as land acquisition issues in Noida
emerged and adversely impacted buyer sentiment. We now cut our Noida
volumes for FY12 by 25% to 6m sf. JP has launched its lower priced/higher
volume offering Aman (c.3,000/sf, separate land parcel) to boost its sales.
Cut realty volumes 14-50% as land agitation continues
With land acquisition related issues in the state of UP likely to remain under
scrutiny till state elections in 1QFY13, we now postpone JP’s launch of
property sales at its Greater Noida and Agra land parcels to FY13 from FY12.
This leads to a 50% cut in FY12 sales volumes and a 14-22% sales cut in
FY13-14 sales volumes. We do note that management maintains its launch
target here later in the year. Additionally, pre-launch of a commercial
property in Greater Noida earlier in 1Q had fetched good response.
Earnings cut 17-27%; Valuations, FCF improvement key support
Slower than expected sales and some delay in execution leads to a revenue
cut of 9-24%, earnings cut of 17-27% & NAV/TP cut of 18% for JP Infra over
FY12-14. Road capex has meanwhile continued (Rs7.6bn in 1Q) and c.85% of
surfacing as well as exchange work is now complete. With FCF likely to turn
positive in FY13 and valuations remaining attractive, we maintain BUY.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Noida woes
JP Infratech’s Noida sales volumes halved in 1Q as poor sentiment
following Noida land agitations impacted sales at the end of the quarter.
Earnings were also slightly below expectations on slower than expected
revenue recognition. With UP elections stated for 1QFY13, we push out
our sales estimates from new land parcel by an year, as well as cut Noida
sales volumes. Cash flow improvement post road completion and stock
trading at 60% discount to NAV and 5x earnings makes it attractive.
1Q results slightly below on weaker revenues
JP Infratech reported 1QFY12 net profit of Rs2.4bn, 5% below estimates on
weaker revenues. Revenues at Rs6.2bn were down 14% QoQ/+3% YoY – but
weaker as new projects take longer than expected time to enter revenue
recognition. Ebitda margins improved 2ppt QoQ, a positive surprise, leading
to a smaller drop in Ebitda to Rs3.0bn.
Sales half QoQ as Noida issues hit sentiment
While we build in lower sales in Noida as JP curtails supply; sales at ~1.3m sf
were lower than expected, down 50% QoQ. Pricing, at c.Rs4,600/sf, was up
c.45% YoY as JP sold a better mix/took price increases early on in April. The
volumes dropped for the company in June as land acquisition issues in Noida
emerged and adversely impacted buyer sentiment. We now cut our Noida
volumes for FY12 by 25% to 6m sf. JP has launched its lower priced/higher
volume offering Aman (c.3,000/sf, separate land parcel) to boost its sales.
Cut realty volumes 14-50% as land agitation continues
With land acquisition related issues in the state of UP likely to remain under
scrutiny till state elections in 1QFY13, we now postpone JP’s launch of
property sales at its Greater Noida and Agra land parcels to FY13 from FY12.
This leads to a 50% cut in FY12 sales volumes and a 14-22% sales cut in
FY13-14 sales volumes. We do note that management maintains its launch
target here later in the year. Additionally, pre-launch of a commercial
property in Greater Noida earlier in 1Q had fetched good response.
Earnings cut 17-27%; Valuations, FCF improvement key support
Slower than expected sales and some delay in execution leads to a revenue
cut of 9-24%, earnings cut of 17-27% & NAV/TP cut of 18% for JP Infra over
FY12-14. Road capex has meanwhile continued (Rs7.6bn in 1Q) and c.85% of
surfacing as well as exchange work is now complete. With FCF likely to turn
positive in FY13 and valuations remaining attractive, we maintain BUY.
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