Four coal blocks of JAL deemed illegal… :: ICICI Securities, PDF link

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
Four coal blocks of JAL deemed illegal…
JAL's coal block Mandla (North) and three coal blocks, namely, Amelia
(North), Mandla (South) and Dongri Tal-II, which were in JV with Madhya
Pradesh State Mining Corporation, are part of the illegal coal blocks as per
the Supreme Court's judgement. The Supreme Court has allowed
operations of the mines of Amelia (North) and Mandla (North), which are
already in operation, till March 31, 2015. Also, the management has not
taken any financial loss or provision for these as of now and is in the
process of detailed assessment.
Power assets sale keep getting delayed…
After TAQA called off the deal to acquire JAL’s hydropower assets,
Reliance Power also called off the deal citing regulatory uncertainty over
the Karcham Wangtoo hydroelectric project. Media reports indicated the
Central Electrical Authority (CEA) was likely to issue a show-cause notice
for alleged violations with respect to techno-economic clearance to the
Karcham Wangtoo project. Currently, JSW Energy has shown interest in
buying these assets. However, we believe due to regulatory uncertainties
pertaining to the plant, there is the possibility of a delay in asset
monetisation and consequent debt reduction.
Regulatory hurdles affecting real estate business…
Recently, the Supreme Court refused to entertain a plea of one of JAL’s
real estate subsidiary (JPIL) seeking a direction to Noida Authority to
grant completion certificate to its projects falling within a 10-km radius of
the Okhla Bird Sanctuary. Also, JAL came under the radar of competition
watchdog, CCI, for allegedly imposing unfair conditions on buyers of one
of its projects in Noida.
Rising concerns; maintain HOLD…
Given the regulatory hurdles, we believe JAL’s asset monetisation and
consequent debt reduction plans are getting delayed. In addition to these,
the recent promoter stake sale and interest shown in buying hydropower
projects in the Kinnaur district, where they are already trying to sell their
existing hydropower projects, has impacted investor’s sentiments. Hence,
we recommend HOLD on the stock with a revised SOTP based target
price of | 32/share. We value JAL’s cement business at | 60/share,
construction business at | 30/share (5x FY16E EV/EBITDA), power & real
estate at | 9/share and | 15/share, respectively (refer exhibit 15 for more
details on valuation).

LINK
http://content.icicidirect.com/mailimages/IDirect_JaiprakashAssociates_Q2FY15.pdf