Jaiprakash Associates - Results in line; risk-reward favorable - AXIS Securities

Jaiprakash Associates' (JPA) Q3FY13 EBITDA was in line at Rs 8 bn (down 8% YoY; est of Rs 7.6 bn). Cement and EPC results were in line (PBIT of Rs 1.2 bn and Rs 2.9 bn respectively). EPC margin has reverted closer to normalized levels (23% PBIT margin vs. 22% est.) after 5 consecutive quarters of high margin at 24-35%. Realty surprised positively with sales of Rs 6.1 bn (up 99% YoY; est. of Rs 2.7 bn). Higher interest cost (Rs 5.3 bn vs. Rs 4.5 bnest) has been offset by higher other income. As a result, PAT came in line at Rs 1.1 bn.

Post the recent correction in stock price, we believe risk reward has turned favorable. We introduce our FY15 est. (EPS of Rs11.6) and roll over our SoTPbased TP to Mar 14. Upgrade to BUY with revised TP of Rs 96 (Rs 83 earlier).

Source : Equity Bulls

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