Dear All,
Forwarding you the Result Update on JP Associates for 4QFY2011 with a Buy recommendation and a Target Price of `107 (12 months).
Jaiprakash Associates (JAL) reported mixed set of numbers for 4QFY2011. The company’s top line and bottom line came in ahead of our expectations, even though margins witnessed a decline due to higher other income and lower tax provision. We have revised our FY2012 and FY2013 estimates to factor in pick-up on the revenue front for all segments, margin pressures and higher interest cost. We expect JAL to emerge as one of the fastest growing conglomerates in the cement, power and real estate spaces going ahead. Hence, we maintain our Buy recommendation on the stock.
Mixed results: On the top-line front, the company’s revenue grew by 19.0% yoy to `3,982cr (`3,347cr) vs. our estimate of `3,397cr. EBITDA margin came in at 21.4% vs. our expectation of 26.9% on account of lower margins in the cement and construction segments. Interest cost was above our estimates at `405cr (`299cr), up 35.4% yoy and 19.7% qoq. The bottom line stood at `302.0cr vs. our estimate of `253.5cr, despite lower margins due to higher-than-expected revenue growth, higher other income and lower tax provision.
Outlook and valuation: We expect JAL to post top-line and bottom-line CAGRs of 19.0% and 32.4%, respectively, over FY2011–13E. We have valued JAL’s cement business at 6.5x EV/EBITDA (`67.4/share) and construction division at FY2013E target EV/EBITDA multiple of 6.5x (`32.1/share). We have valued its power and real estate businesses on mcap basis (giving 15% holding company discount), which contributes `61.0/share to our target price. The hotel segment contributes `0.8/share. Treasury shares (`7.6/share) have been valued at the current market price, whereas net debt is accounted for on a per share basis in our valuation at `61.8. We maintain Buy with an SOTP target price of `107, implying an upside of 25.9% from current levels.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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