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JAIPRAKASH ASSOCIATES LTD
PRICE: RS.70 RECOMMENDATION: BUY
TARGET PRICE: RS.92 FY13E P/E: 21.7X
q Revenues of the company in Q2FY12 registered a marginal growth of 2%
YoY, in line with our estimates. Revenue growth during Q2FY12 was
impacted by decline in revenue booking seen in cement and real estate
division on a sequential basis.
q Operating margins in Q2FY12 stood strong at 22.3% and fall in the cement
division margin was compensated by higher construction division
margins.
q Net profits for the quarter were much ahead of our estimates led by control
over interest outgo as well as stable margins.
q At current price of Rs 70, stock is trading at 20.1x and 21.7x P/E and 11.4x
and 11.6x EV/EBITDA on FY12 and FY13 estimates respectively. We marginally
tweak our estimates to factor in annual report details and roll
forward our valuations on FY13. We maintain BUY with a price target of
Rs 92 (earlier Rs 90). Near term triggers for the stock could come from
commencement of Yamuna Expressway by Dec, 2011 and potential stake
sale in the cement division.
Revenue growth in line with estimates
n Revenues of the company in Q2FY12 registered a marginal growth of 2% YoY,
in line with our estimates.
n Revenue growth during Q2FY12 was impacted by decline in revenue booking
seen in cement and real estate division on a sequential basis and lower real estate
revenues on yearly basis. During Q2FY12, company reported 9.6% YoY
growth in cement revenues while construction revenues declined by 1% YoY and
real estate revenues declined by 38% YoY.
n Cement division performance: Cement volumes for Q2FY12 stood at 4.1MT as
against 3.43MT for Q2FY11. Cement volumes have witnessed an increase due to
commissioning of new capacities as well as entry into newer markets. Cement
realizations have witnessed a decline during Q2FY12 and average realizations for
the company stood at Rs 3229 per tonne as against Rs 3519 per tonne in
Q1FY12. Company's 5MT balaji plant in AP is expected to get operational from
Dec, 2011 and 1.1MT plant at Dalla, UP is also expected to commission by
Q3FY12. Company continues to maintain its capacity expansion target of 35MT
by FY13. We expect cement volumes to jump to 19 MT for FY12 and 20MT for
FY13.
n Construction division performance: Construction division performance going
ahead would be dependent upon third party projects as well as civil works of its
other power plants since construction work on Karcham Wangtoo is complete
and Yamuna expressway is expected to complete by Dec, 2011. Company has
also recently own orders worth Rs 20.8 bn for hydro power plant in Bhutan. We
believe that going forward, growth in construction division revenues are likely to
remain low and would start picking up from FY13 on ramp up in construction
from thermal power projects. We expect construction division revenues to remain
largely flattish at Rs 55 bn for FY12 and FY13.
n Real estate division revenues declined by 38% YoY due to lower revenue booking
from its projects. We expect this division to record revenues of Rs 12.9 bn for
FY12.
n We maintain our estimates and expect revenues to grow to Rs 136 bn and Rs
141 bn for FY12 and FY13 respectively.
Operating margins stayed stable but cement margins declined
sharply
n Operating margins in Q2FY12 stood strong at 22.3% and fall in the cement division
margin was compensated by higher construction division margins.
n EBIT margins in cement division stood at -2.2% while for the construction division,
it stood at 36.1% for Q2FY12. EBIT margins in the cement division have
declined due to fall in cement realizations as well as higher cost. Cement realizations
for Q2FY12 stood at Rs 3229, down by 8% QoQ and 9% YoY. EBITDA
per tonne during Q2FY12 also declined sharply and stood at Rs 136 per tonne as
against Rs 637 per tonne seen during Q1FY12 and Rs 748 per tonne in Q2FY11.
Company has also been entering newer markets at aggressive pricing which explains
the sharp drop in realizations and EBITDA/tonne as compared to its peers.
Construction division EBIT margins stood at 36.1% and EBITDA margins stood at
37.2% for Q2FY12. Construction margins remain quite lumpy during H1FY12 but
on a full year basis, we expect construction margins to be around 18%.
n On a consolidated basis, we expect margins to be 23.7% and 23.1% respectively
for FY12 and FY13.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
JAIPRAKASH ASSOCIATES LTD
PRICE: RS.70 RECOMMENDATION: BUY
TARGET PRICE: RS.92 FY13E P/E: 21.7X
q Revenues of the company in Q2FY12 registered a marginal growth of 2%
YoY, in line with our estimates. Revenue growth during Q2FY12 was
impacted by decline in revenue booking seen in cement and real estate
division on a sequential basis.
q Operating margins in Q2FY12 stood strong at 22.3% and fall in the cement
division margin was compensated by higher construction division
margins.
q Net profits for the quarter were much ahead of our estimates led by control
over interest outgo as well as stable margins.
q At current price of Rs 70, stock is trading at 20.1x and 21.7x P/E and 11.4x
and 11.6x EV/EBITDA on FY12 and FY13 estimates respectively. We marginally
tweak our estimates to factor in annual report details and roll
forward our valuations on FY13. We maintain BUY with a price target of
Rs 92 (earlier Rs 90). Near term triggers for the stock could come from
commencement of Yamuna Expressway by Dec, 2011 and potential stake
sale in the cement division.
Revenue growth in line with estimates
n Revenues of the company in Q2FY12 registered a marginal growth of 2% YoY,
in line with our estimates.
n Revenue growth during Q2FY12 was impacted by decline in revenue booking
seen in cement and real estate division on a sequential basis and lower real estate
revenues on yearly basis. During Q2FY12, company reported 9.6% YoY
growth in cement revenues while construction revenues declined by 1% YoY and
real estate revenues declined by 38% YoY.
n Cement division performance: Cement volumes for Q2FY12 stood at 4.1MT as
against 3.43MT for Q2FY11. Cement volumes have witnessed an increase due to
commissioning of new capacities as well as entry into newer markets. Cement
realizations have witnessed a decline during Q2FY12 and average realizations for
the company stood at Rs 3229 per tonne as against Rs 3519 per tonne in
Q1FY12. Company's 5MT balaji plant in AP is expected to get operational from
Dec, 2011 and 1.1MT plant at Dalla, UP is also expected to commission by
Q3FY12. Company continues to maintain its capacity expansion target of 35MT
by FY13. We expect cement volumes to jump to 19 MT for FY12 and 20MT for
FY13.
n Construction division performance: Construction division performance going
ahead would be dependent upon third party projects as well as civil works of its
other power plants since construction work on Karcham Wangtoo is complete
and Yamuna expressway is expected to complete by Dec, 2011. Company has
also recently own orders worth Rs 20.8 bn for hydro power plant in Bhutan. We
believe that going forward, growth in construction division revenues are likely to
remain low and would start picking up from FY13 on ramp up in construction
from thermal power projects. We expect construction division revenues to remain
largely flattish at Rs 55 bn for FY12 and FY13.
n Real estate division revenues declined by 38% YoY due to lower revenue booking
from its projects. We expect this division to record revenues of Rs 12.9 bn for
FY12.
n We maintain our estimates and expect revenues to grow to Rs 136 bn and Rs
141 bn for FY12 and FY13 respectively.
Operating margins stayed stable but cement margins declined
sharply
n Operating margins in Q2FY12 stood strong at 22.3% and fall in the cement division
margin was compensated by higher construction division margins.
n EBIT margins in cement division stood at -2.2% while for the construction division,
it stood at 36.1% for Q2FY12. EBIT margins in the cement division have
declined due to fall in cement realizations as well as higher cost. Cement realizations
for Q2FY12 stood at Rs 3229, down by 8% QoQ and 9% YoY. EBITDA
per tonne during Q2FY12 also declined sharply and stood at Rs 136 per tonne as
against Rs 637 per tonne seen during Q1FY12 and Rs 748 per tonne in Q2FY11.
Company has also been entering newer markets at aggressive pricing which explains
the sharp drop in realizations and EBITDA/tonne as compared to its peers.
Construction division EBIT margins stood at 36.1% and EBITDA margins stood at
37.2% for Q2FY12. Construction margins remain quite lumpy during H1FY12 but
on a full year basis, we expect construction margins to be around 18%.
n On a consolidated basis, we expect margins to be 23.7% and 23.1% respectively
for FY12 and FY13.
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