Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Revenue and earnings were
flat year-on-year despite an
improved EBITDA margin
• Cement division saw a 13%
YoY rise in volume, but ASP
fell by 6% YoY
• Yamuna Expressway delayed
by recent farmers’ protests
Background
Jaypee group is a leading
infrastructure conglomerate in India
with exposure to the powergeneration,
cement, construction,
and property sectors.
Highlights
Jaiprakash Associates’ (JPA) sales
for 1Q FY12 amounted to Rs31bn
while adjusted profit after tax (PAT)
was Rs1.07bn, both flat year-on-year.
However, earnings were far below
the Bloomberg-consensus forecast
of Rs1.5bn, due to earnings declines
in the construction division and
higher interest costs. Revenue for
the construction division (40% of
revenue) declined by 11% YoY, but
the cement business (47% of
revenue) saw a rise of 6% YoY led by
a 13% YoY increase in volume. The
EBITDA margin improved by 3.3pp
YoY to 23.5%, led by an
improvement in the margin for the
construction division. Interest and
depreciation costs were respectively
higher by 30% YoY and 15% YoY due
to the commissioning of additional
cement capacity. The company
expects to raise cement capacity to
36m tonnes by FY13, from 26m
tonnes for FY11.
JPA recently won a Rs21bn order for
the construction of a 990MW hydropower
project in Bhutan, which
improves the revenue-growth
visibility for the construction
division. Also, the company seems
confident that in-house power
projects and property will drive
future order-book growth. Given the
current low visibility on the order
book, investors may be concerned
about future revenue growth in the
construction business
The adjusted PAT of JPA’s 83%-
owned subsidiary, Jaypee Infratech
(Not rated) (which is developing the
165km-long Yamuna Expressway
along with 6,250 acres of property
developments), fell by 5% QoQ to
Rs2.3bn for 1Q FY11 on lower sales,
resulting from higher interest rates
and the recent farmers’ protests in
the Noida region. The expressway,
which had been due to be completed
in July this year, is likely to be
delayed by 6-9 months.
The commercial operation of units 1
and 2 (250MW each) of Jaiprakash
Power Ventures’ (Not rated) (a 76%-
owned subsidiary of JPA) 1000MW
Karcham Wangtoo hydro-electric
project started respectively in May
and June of this year. Units 3 and 4
are likely to start commercial
operation shortly. This would
increase the operational powerplant
capacity from 700MW to
1,700MW
Valuation
The stock is trading currently at
PERs of 13.7x and 10.7x on the FY12
Bloomberg-consensus standaloneand
consolidated-earnings forecasts,
respectively. The company’s net debt
to equity was 2x (standalone basis)
and 3.7x (consolidated basis) at the
end of FY11.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Revenue and earnings were
flat year-on-year despite an
improved EBITDA margin
• Cement division saw a 13%
YoY rise in volume, but ASP
fell by 6% YoY
• Yamuna Expressway delayed
by recent farmers’ protests
Background
Jaypee group is a leading
infrastructure conglomerate in India
with exposure to the powergeneration,
cement, construction,
and property sectors.
Highlights
Jaiprakash Associates’ (JPA) sales
for 1Q FY12 amounted to Rs31bn
while adjusted profit after tax (PAT)
was Rs1.07bn, both flat year-on-year.
However, earnings were far below
the Bloomberg-consensus forecast
of Rs1.5bn, due to earnings declines
in the construction division and
higher interest costs. Revenue for
the construction division (40% of
revenue) declined by 11% YoY, but
the cement business (47% of
revenue) saw a rise of 6% YoY led by
a 13% YoY increase in volume. The
EBITDA margin improved by 3.3pp
YoY to 23.5%, led by an
improvement in the margin for the
construction division. Interest and
depreciation costs were respectively
higher by 30% YoY and 15% YoY due
to the commissioning of additional
cement capacity. The company
expects to raise cement capacity to
36m tonnes by FY13, from 26m
tonnes for FY11.
JPA recently won a Rs21bn order for
the construction of a 990MW hydropower
project in Bhutan, which
improves the revenue-growth
visibility for the construction
division. Also, the company seems
confident that in-house power
projects and property will drive
future order-book growth. Given the
current low visibility on the order
book, investors may be concerned
about future revenue growth in the
construction business
The adjusted PAT of JPA’s 83%-
owned subsidiary, Jaypee Infratech
(Not rated) (which is developing the
165km-long Yamuna Expressway
along with 6,250 acres of property
developments), fell by 5% QoQ to
Rs2.3bn for 1Q FY11 on lower sales,
resulting from higher interest rates
and the recent farmers’ protests in
the Noida region. The expressway,
which had been due to be completed
in July this year, is likely to be
delayed by 6-9 months.
The commercial operation of units 1
and 2 (250MW each) of Jaiprakash
Power Ventures’ (Not rated) (a 76%-
owned subsidiary of JPA) 1000MW
Karcham Wangtoo hydro-electric
project started respectively in May
and June of this year. Units 3 and 4
are likely to start commercial
operation shortly. This would
increase the operational powerplant
capacity from 700MW to
1,700MW
Valuation
The stock is trading currently at
PERs of 13.7x and 10.7x on the FY12
Bloomberg-consensus standaloneand
consolidated-earnings forecasts,
respectively. The company’s net debt
to equity was 2x (standalone basis)
and 3.7x (consolidated basis) at the
end of FY11.
No comments:
Post a Comment