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Jaiprakash Associates
We met the senior management team and also visited the newly constructed F1
circuit and under-construction Yamuna Expressway.
After the tremendous success of India’s maiden grand prix and general acclaim for
the way it was organized, JPA management was in a good mood. Investor concerns
on debt levels were acknowledged and JPA seemed determined to fix it.
Elaborating on the cement demerger plan, JPA said the Board had approved
transferring 9.8mtpa to a wholly owned sub, and hoped that the company will be able
to retire debt to the tune of US$800M-US$1B as a result of a partial strategic sale.
Our calculation suggested an implied EV/ton upward of US$150/ton, to which
management responded that the denominator should include another 10mt of
potential expansion, including 3mt that could potentially come in from the newly
announced Andhra Cement buyout by the promoter.
The company also pointed out that JPA’s stake in JPIN / JPVL would have to come
down, to comply with free float guidelines.
In response to investor concerns JPA said they would follow a more judicious mix
of cash flows and growth, going forward – while they wouldn’t want to lose
attractive growth opportunities, they would seek to keep leverage at more
manageable level and the debt should peak by Mar-12. They were confident that
cement capacities will be fully utilized in the next 2 years.
The company hopes to begin Yamuna expressway tolling by April 2012 and
launch land parcel #3 (close to Sports City, 116msft) soon. Continued optimism on
sales/ cash flows.
On power, the company is keeping its option on securitizing the receivables of newly
commissioned 1000MW Karcham Wangtoo, open, IF an US$250-300M of equity
raising does not materialize. Unless funding options open up, the company might go
slow on Bina-2 (1,000MW) and Karchana (1,980MW). For Bina-1 (500MW), which
the company is hoping to commission in FY13; the company said it has a back-up
coal block in Maharashtra, and is also hoping to receive coal supply from Coal India.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jaiprakash Associates
We met the senior management team and also visited the newly constructed F1
circuit and under-construction Yamuna Expressway.
After the tremendous success of India’s maiden grand prix and general acclaim for
the way it was organized, JPA management was in a good mood. Investor concerns
on debt levels were acknowledged and JPA seemed determined to fix it.
Elaborating on the cement demerger plan, JPA said the Board had approved
transferring 9.8mtpa to a wholly owned sub, and hoped that the company will be able
to retire debt to the tune of US$800M-US$1B as a result of a partial strategic sale.
Our calculation suggested an implied EV/ton upward of US$150/ton, to which
management responded that the denominator should include another 10mt of
potential expansion, including 3mt that could potentially come in from the newly
announced Andhra Cement buyout by the promoter.
The company also pointed out that JPA’s stake in JPIN / JPVL would have to come
down, to comply with free float guidelines.
In response to investor concerns JPA said they would follow a more judicious mix
of cash flows and growth, going forward – while they wouldn’t want to lose
attractive growth opportunities, they would seek to keep leverage at more
manageable level and the debt should peak by Mar-12. They were confident that
cement capacities will be fully utilized in the next 2 years.
The company hopes to begin Yamuna expressway tolling by April 2012 and
launch land parcel #3 (close to Sports City, 116msft) soon. Continued optimism on
sales/ cash flows.
On power, the company is keeping its option on securitizing the receivables of newly
commissioned 1000MW Karcham Wangtoo, open, IF an US$250-300M of equity
raising does not materialize. Unless funding options open up, the company might go
slow on Bina-2 (1,000MW) and Karchana (1,980MW). For Bina-1 (500MW), which
the company is hoping to commission in FY13; the company said it has a back-up
coal block in Maharashtra, and is also hoping to receive coal supply from Coal India.
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