Jaiprakash Associates (JP Associates), India’s leading cement and construction company, is all set to
reap the benefits of India’s infrastructure spending. The company has also monetised very well on the
real estate properties of Yamuna Expressway. The marked improvement in the macro environment has
improved accessibility to the capital and thus eased the concerns of liquidity to some extent for the
company.
Since the last couple of months, the company is under the process of selling their stake in two cement
plant located at Gujarat and Andhra Pradesh, with a total capacity of 9.8 million tonne. Any breakthrough
in the selling of these plants will be a positive trigger for the company because we believe this
deal will help the company to raise about Rs 6,000 crore, which will help it to ease burden on leverage
balance sheet. Further the company has successfully raised funds through issue of foreign currency
convertible bond of up to US $ 200 million.
We like JP Associates due to its diversified business model and aggressive expansion plans. In terms of
valuation, we value the stock using the SOTP valuation methodology and arrive at a value of Rs105 per
share.
No comments:
Post a Comment