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UBS Investment Research
Jaiprakash Associates Limited
FY11 consolidated results beat
e xpectations; Q1FY12 largely in-line
Event: FY11 consolidated results ahead of UBS and consensus estimates
JAL reported FY11 (consolidated) revenues of Rs113bn (+73% y/y; UBS-e
Rs119bn, consensus Rs118bn), operating profit of Rs47.4bn (+89% y/y; UBS-e
Rs43.7bn, consensus Rs39.3bn) and pre-ex PAT of Rs13.8bn (consensus
Rs10.6bn). The beat was primarily due to lower-than-expected inter-segment
eliminations in the E&C business during consolidation and higher power revenues.
Gross debt at FY11-end is Rs444bn (~US$10bn) and cash balance is Rs68bn.
Impact: Q1FY12 largely in-line; E&C EBIT margins robust at ~20%
JAL reported Q1 (standalone) revenues of Rs31.8bn (-1% y/y; UBS-e Rs31.3bn,
consensus Rs33.8bn), operating profit of Rs7.7bn (+13% y/y; UBS-e Rs7.7bn,
consensus Rs7.4bn) and PAT of Rs1.1bn (+1% y/y; UBS-e Rs1.2bn, consensus
Rs1.4bn). PAT was slightly below our estimate due to higher deferred taxes
(effective tax rate of 40% during Q1). Construction EBIT margins were 19.6%
while real estate EBIT margins were 53.4% (+10.8% y/y).
Action: 3.1mt cement plants commissioned in Q1
During Q1FY12 cement plants at Sikandrabad UP (1mt) and Jharkhand (2.1mt,
Bokaro JV) were commissioned. Unit 3 of Karcham is likely to be commissioned
soon (in test run) and Unit 4 by Sep-end (2 units, 500MW, operationalized in Q1).
Valuation: Buy rating
Our SOTP-based PT is Rs105.
Jaiprakash Associates Limited
Jaiprakash Associates is a large infrastructure conglomerate in India, with a
presence in a large number of businesses including cement, power, real estate,
engineering and construction, expressways/highways, and hospitality.
Statement of Risk
The company faces execution risks, as it embarks on a large-scale capacity
expansion over the next three to five years. It also faces regulatory risks,
changes in government regulations and policies, decline in cement prices,
caused by possible oversupply, delay in land acquisition for the real estate
projects and a fall in real estate prices.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Jaiprakash Associates Limited
FY11 consolidated results beat
e xpectations; Q1FY12 largely in-line
Event: FY11 consolidated results ahead of UBS and consensus estimates
JAL reported FY11 (consolidated) revenues of Rs113bn (+73% y/y; UBS-e
Rs119bn, consensus Rs118bn), operating profit of Rs47.4bn (+89% y/y; UBS-e
Rs43.7bn, consensus Rs39.3bn) and pre-ex PAT of Rs13.8bn (consensus
Rs10.6bn). The beat was primarily due to lower-than-expected inter-segment
eliminations in the E&C business during consolidation and higher power revenues.
Gross debt at FY11-end is Rs444bn (~US$10bn) and cash balance is Rs68bn.
Impact: Q1FY12 largely in-line; E&C EBIT margins robust at ~20%
JAL reported Q1 (standalone) revenues of Rs31.8bn (-1% y/y; UBS-e Rs31.3bn,
consensus Rs33.8bn), operating profit of Rs7.7bn (+13% y/y; UBS-e Rs7.7bn,
consensus Rs7.4bn) and PAT of Rs1.1bn (+1% y/y; UBS-e Rs1.2bn, consensus
Rs1.4bn). PAT was slightly below our estimate due to higher deferred taxes
(effective tax rate of 40% during Q1). Construction EBIT margins were 19.6%
while real estate EBIT margins were 53.4% (+10.8% y/y).
Action: 3.1mt cement plants commissioned in Q1
During Q1FY12 cement plants at Sikandrabad UP (1mt) and Jharkhand (2.1mt,
Bokaro JV) were commissioned. Unit 3 of Karcham is likely to be commissioned
soon (in test run) and Unit 4 by Sep-end (2 units, 500MW, operationalized in Q1).
Valuation: Buy rating
Our SOTP-based PT is Rs105.
Jaiprakash Associates Limited
Jaiprakash Associates is a large infrastructure conglomerate in India, with a
presence in a large number of businesses including cement, power, real estate,
engineering and construction, expressways/highways, and hospitality.
Statement of Risk
The company faces execution risks, as it embarks on a large-scale capacity
expansion over the next three to five years. It also faces regulatory risks,
changes in government regulations and policies, decline in cement prices,
caused by possible oversupply, delay in land acquisition for the real estate
projects and a fall in real estate prices.
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