Jaiprakash Associates - Inline numbers however challenges persists::Emkay

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Jaiprakash Associates

Inline numbers however challenges persists

ACCUMULATE

CMP: Rs 58                                       Target Price: Rs 72

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n     APAT at Rs 1.07bn (+1% yoy) inline. Revenues remained flat (Rs 31.4bn) as 6% yoy revenue growth in cement was negated by 11% &5% decline in construction & Real estate

n     EBIDTA grew 15% yoy aided by 2.4x increase in Construction EBIT due to low base. Cement EBIT declined 32%yoy on account of lower realization & higher energy & freight cost

n     Sluggish cement demand has impacted realisation(-Rs20/bag from Apr-11). JPA’s key markets worst affected. Cut earnings by 24/16% for FY12/13 led by lowered volume & prices     

n     Cement profitability & leveraged B/s marring outlook. However, valuations at 7.5x EV/EBITDA inexpensive. Lower TP-Rs72 led by earnings cut & lower subs value Accumulate