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Research
Jaiprakash Associates - 3QFY12 Results Update - Motilal Oswal
Posted On : 2012-02-19 10:19:35( TIMEZONE : IST )
- 3QFY12 operating performance above estimates: During 3QFY12, JPA reported revenues of INR33.1b (up 14% YoY), EBIDTA of INR8.2b (up 3% YoY) and net profit of INR2.1b (down 12% YoY). This is above our estimates of INR1.4b. EBIDTA too was higher than our estimate of INR7.0b. Better than estimated performance is driven by strong performance of Cement business, claims receipt towards group EPC project boosting EPC profits (Karcham Wangtoo, etc) and higher dividend income from Jaypee Infratech (large part of other income, attributable could be INR1.2b+). Thus, the better than estimates were driven partly by operating performance and partly aided by one-offs.
- Cement business performance robust: Cement division volumes stood at 4.25m tons (up 17% YoY), while realisation improved by INR765/ton and EBIDTA by INR500/ton+ QoQ, leading to EBIT of INR1.7b, vs negative EBIT of INR295m in 2QFY12. EPC business too recorded higher margins at 30%, owing to claims receipt. EBIT for division stood at INR3.7b, vs INR2.7b YoY. Real estate division however saw bit moderation with revenues of INR3.1b (down 28% YoY), while EBIT stood at INR1.5b (down 50% YoY)
- E&C business: prior claims boost EPC margin: E&C revenues at INR12.5b, flat YoY; as several large scale projects are competed, near completion (Yamuna Expressway, F1 circuit, Karcham Wangtoo, etc). Margins in E&C however stood at 29.8% (up 840bp YoY), and was higher than estimates.
- Upgrading FY12/13E estimates, maintain Buy: We have upgraded our FY12/13E earnings estimate for JPA by 8% and 25%, respectively to factor in superior performance for Cement business (FY12/13E), one-off gains in EPC division and higher other income (FY12E). We value JPA on SOTP and arrive at TP of INR106/sh, comprising of: Cement business at INR75/sh (6x FY13E EV/EBIT and balance capacity at USD110/ton), EPC business at INR39/ sh (8x FY13E EV/EBIT), Jaiprakash Power at INR38/sh (based on our TP of INR46/sh), Jaypee Infratech at INR30/sh (based on our TP of INR55/sh), other Real Estate (Jaypee Greens, Land at NOIDA, etc) at INR11/sh less net debt on books (less of cash, investment valued at BV in other subsidiaries) at INR87/sh. Maintain Buy.
