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C o n s t r u c t i o n b u s i n e s s l eads t o s t r o n g p r o f i t a b i l i t y …
JAL’s Q2FY12 results were well ahead of our expectation largely on
account of a positive surprise in the construction division (revenues - |
1555 crore at EBIT margin of 36.1%) offsetting the muted performance in
the cement division (realisations dipped | 401.4/tonne sequentially to |
3258/tonne turning EBIT into losses at | 72/tonne) . With the improvement
in cement realisation across regions post Q2FY12 we expect the cement
division performance to improve, going ahead. Furthermore, the
company announced the de-merger of its cement plant in Gujarat and AP
into JCCL. Going ahead, JAL may sell a stake in JCCL to reduce its rising
debt level. We maintain our BUY recommendation.
ß Construction profitability leads to better Q2FY12 performance
JAL’s Q2FY12 adjusted net profit of | 129 was well ahead of our estimates
(| 27 crore). The positive surprise was on account of the construction
division. Revenues of the construction division came at | 1555 crore (our
expectation: | 1213 crore) with EBIT margin of 35.5% (our expectation:
19.6%).
ß Cement division – realisation muted but to improve ahead
The realisations declined | 270/tonne YoY and | 401.4/tonne sequentially
to | 3258/tonne restricting cement division growth to ~7% despite 18.4%
volume growth. This also turned the EBIT/tonne turned negative at ~| -
73/tonne. However, there has been an improvement in cement prices
across the region post Q2FY12. Hence, from Q3Y12 onwards the
realisation and EBIT should improve significantly.
ß Approved cement restructuring
JAL’s Board of Directors approved (subject to high court approval) the demerger of its cement plants in Gujarat, AP and its other units into its
wholly owned subsidiary, namely, Jaypee Cement Corporation Ltd (JCCLcurrently implementing 3 MTPA plant in Karnataka). The company may
sell a stake in JCCL to reduce its rising debt level, going ahead.
Va l u a t i o n
At the CMP, the stock is trading at 1.4x FY13 P/BV. We maintain our BUY
recommendation on the stock with a price target of | 82 per share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C o n s t r u c t i o n b u s i n e s s l eads t o s t r o n g p r o f i t a b i l i t y …
JAL’s Q2FY12 results were well ahead of our expectation largely on
account of a positive surprise in the construction division (revenues - |
1555 crore at EBIT margin of 36.1%) offsetting the muted performance in
the cement division (realisations dipped | 401.4/tonne sequentially to |
3258/tonne turning EBIT into losses at | 72/tonne) . With the improvement
in cement realisation across regions post Q2FY12 we expect the cement
division performance to improve, going ahead. Furthermore, the
company announced the de-merger of its cement plant in Gujarat and AP
into JCCL. Going ahead, JAL may sell a stake in JCCL to reduce its rising
debt level. We maintain our BUY recommendation.
ß Construction profitability leads to better Q2FY12 performance
JAL’s Q2FY12 adjusted net profit of | 129 was well ahead of our estimates
(| 27 crore). The positive surprise was on account of the construction
division. Revenues of the construction division came at | 1555 crore (our
expectation: | 1213 crore) with EBIT margin of 35.5% (our expectation:
19.6%).
ß Cement division – realisation muted but to improve ahead
The realisations declined | 270/tonne YoY and | 401.4/tonne sequentially
to | 3258/tonne restricting cement division growth to ~7% despite 18.4%
volume growth. This also turned the EBIT/tonne turned negative at ~| -
73/tonne. However, there has been an improvement in cement prices
across the region post Q2FY12. Hence, from Q3Y12 onwards the
realisation and EBIT should improve significantly.
ß Approved cement restructuring
JAL’s Board of Directors approved (subject to high court approval) the demerger of its cement plants in Gujarat, AP and its other units into its
wholly owned subsidiary, namely, Jaypee Cement Corporation Ltd (JCCLcurrently implementing 3 MTPA plant in Karnataka). The company may
sell a stake in JCCL to reduce its rising debt level, going ahead.
Va l u a t i o n
At the CMP, the stock is trading at 1.4x FY13 P/BV. We maintain our BUY
recommendation on the stock with a price target of | 82 per share.
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