Jaiprakash Associates : Quarterly performance driven by one off in construction ::Emkay

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Jaiprakash Associates

Quarterly performance driven by one off in construction

HOLD

CMP: Rs67                                        Target Price: Rs66

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n     APAT at Rs 0.1bn(-91% yoy) below our estimates (Rs 0.73bn) led by EBIT loss in Cement (Rs0.3bn) as cement realizations decline 9% yoy, RPAT at Rs1.3bn driven by Rs1.7 bn one off in Construction

n     Adj. Revenues at Rs 29bn (-3.2% yoy), Real estate rev. decline 37.6%yoy (Rs 2bn), Key project near completion lead to 12% yoy decline in construction revenues to Rs13.85bn

n     Looking to divest stake in Gujarat & Andhra cement plants (capacity - ~10MTPA). Key monitorable in the deal valuation & cash inflow to parent that can help deleverage B/s

n     Dismal Q2 leading to earnings downgrade of –14.6%/-11% for FY12E/FY13E.  Valuations at 7.1X FY13 EV/EBITDA appears fairly priced. Downgrade to HOLD with a Target price of Rs66