Jaiprakash Associates LTD - Initiating Coverage (Feb'09)

Systematix
Institutional Research
November 3,
INITIATING COVERAGE Jaiprakash Associates Ltd. February 4, 2009
Industry Engineering &

Construction
Opportunity Expressway… BUY (CMP: Rs.66)
Jaiprakash Associates Ltd (JAL) is an infrastructure conglomerate, all set to gather
momentum through its 4 main growth engines viz. Engineering & Construction,
Cement, Power and Real Estate. The order book of JAL’s E&C division is USD8.55 bn,
23.7x times of its E&C division’s FY08 sales, unmatched by any player in the industry.
Similarly, JAL is likely to become India’s 3rd largest cement producer by 2010 with a
capacity of 26.2mnT. Further, in Power, through its subsidiaries, JAL is expected to
add 7190 MW by 2016, taking its total capacity to 7890 MW. Besides, JAL has also
forayed into sectors like steel and wind power, and has also entered into JVs for oil &
gas exploration, coal mining, and power transmission. Given its aggressive capex plan
Bloomberg JPA IN of ~Rs.780bn (to be funded by equity contribution, debt and real estate offtakes) and
Reuters JAIA.BO a robust E&C order book (USD8.55bn), JAL seems aptly placed to capitalize on the
BSE Group A growth opportunities in the infrastructure sector. Going forward, monetization of
BSE Code: 532532 available land from Yamuna Expressway (272mn sq. ft. with FSI of 1.5) and Ganga
NSE Symbol JPASSOCIAT Expressway Project (2.2 bn sq. ft. with FSI of 1.5) would lead to significant value
BSE Sensex 9149 accretion for JAL. Initiate with BUY and a price target of Rs.117.
NSE Nifty 2785 A robust order backlog – ensures company’s growth potential
Market Data Current order backlog of JAL stands at USD8.55 bn, which is 23.7x times of FY08
Market Cap. (Rs. Mn.) 78078 construction revenue. Almost 90% of total order backlog belongs to internal projects.
Share Cap. (Rs. Mn.) 2366 Howover some of its major projects are yet to receive financial closures viz: Ganga
52 Wk High/Low 489 / 47 Expressway Project. The average execution period for entire projects falls between 36
Avg. Vol. (Weekly) 18681213 to 48 months.
Face Value (Rs.) 2 Huge Capacity expansion in Cement along with captive power
Shareholding Pattern JAL is likely to become the 3rd largest cement company with a pan‐India presence over
(As on 31st December 2008) (%) FY10. JAL intend to add 8.9mnT in FY09E and 8.3mnT in FY10E taking total installed
capacity to 26.2mnT by FY2010. Considering the probable demand‐supply gap in the
cement sector, we conservatively estimate the total capacity to be 15mnT and 20mnT
in FY09E and FY10E respectively for our projections. It is also evident from that fact that
JAL added only 2.9mnT of capacity in first 9 months of FY09 against an anticipated
addition of 8.9mnT in FY09).
Yamuna Expressway project likely to contribute significantly to JAL’s earning growth
JAL has got 6250 acres of land under the subsidiary of Jaypee Infratech Ltd (JIL) in lieu
of Yamuna Expressway Project for 166 km. The land is spread across 5 different
locations in NCR and UP. As on date JIL is having ~1078 acre of land in physical
Financials FY08 FY09E FY10E possession at Noida, where Land use plan is approved for entire land (1250 acres)
Net Sales (Rs mn) 39,851 55,186 74,487 translating 82 mn sq ft (FSI = 1.5) of real estate development primarily consisting of
EBITDA (Rs mn) 10,970 13,939 19,380 Residential (63%), Institutional (9%), Commercial (4%), Roads (12%) and Recreational
PBT (Rs mn) 8,434 9,715 14,288 (12%).
PAT (Rs mn) 6,097 6,846 9,420 Downside risk limited, we see immense value in the business: BUY
EBITDA margin (%) 27.5% 25.3% 26.0% We are of the view that JAL’s growth prospects are still intact considering its robust
PAT margin (%) 15.3% 12.4% 12.6% order backlog and new capacity additions in its various verticals. However the financial
EPS (Rs) 5.2 4.9 6.7 closures for some of its projects are yet to be done. Further a land bank of 6250 acres
CEPS (Rs) 6.9 6.9 9.1 and 30,000 acres that JAL’s subsidiaries got in lieu of Yamuna Expressway and Ganga
P/E (x) 12.7 13.5 9.8 Expressway projects respectively in locations of Noida and along the expressway are
EV/EBITDA (x) 5.1 3.5 1.7 likely to enhance the valuation of JAL. We base our 12 months target of Rs.117 for JAL
ROE (%) 16.3% 11.9% 13.0% based on SOTP methodology.
ROCE (%) 10.6% 8.8% 10.6%
Feb 09 Systematix Research is also available on Bloomberg SSSL <Go> & Thomson Reuters SYSTEMATIX SHARES & STOCKS (I) LTD.
Page 2 2/4/2009JKLHJKLHJated by
SYSTEMATIX Institutional Research
Table of Contents
Investment Case ............................................................................................................................................................................. 3
Valuations ...................................................................................................................................................................................... 6
Price Target Derivation ................................................................................................................................................................... 7
Industry Overview ........................................................................................................................................................................ 11
Cement ................................................................................................................................................................................................. 11
Energy & Power .................................................................................................................................................................................... 12
Company In‐depth ....................................................................................................................................................................... 14
An Overview ......................................................................................................................................................................................... 14
Segmental offerings ............................................................................................................................................................................. 14
Engineering & Construction ................................................................................................................................................................. 15
Cement ................................................................................................................................................................................................. 15
Energy ................................................................................................................................................................................................... 16
Real Estate ........................................................................................................................................................................................... 16
Hospitality ............................................................................................................................................................................................ 17
Corporate Structure ............................................................................................................................................................................. 18
Subsidiaries ......................................................................................................................................................................................... 19
Equity Outlook ...................................................................................................................................................................................... 19
Amalgamation ...................................................................................................................................................................................... 20
Earnings Outlook & Financials ...................................................................................................................................................... 21
9M & Q3FY09 Standalone Results Analysis ................................................................................................................................... 23
Financial Details ........................................................................................................................................................................... 25
Binod Modi Basanth Patil
binodmodi@systematixshares.com basanthp@systematixshares.com
(+91 22 6619 8264) (+91 22 6619 8264)
Feb 09 Systematix Research is also available on Bloomberg SSSL <Go> & Thomson Reuters SYSTEMATIX SHARES & STOCKS (I) LTD. 2
INVESTMENT CASE
JAL, an infrastructure conglomerate, has created a formidable presence across various
segments within Infrastructure space over the years and is known for its execution capability
and rich experience across sectors. JAL enjoyed 54% market share in 10th Five Year plan in
Hydropower Projects and is considered an undisputed leader in Hydro Power Projects in India. It
is aptly placed to capitalize on the upcoming opportunities in Hydro Power Segment (16,557
MW capacities are estimated by Planning Commission to be added in 11th Plan). Further the
new capacities coming in Cement (17.2mnT till FY10), Power (7190 MW to be added till FY16)
along with monetization of land bank (6250 acres received from Yamuna Expressway Project
and 30,000 acres received from Ganga Expressway Project) are likely to enhance the valuation
of JAL. Further with the entry into steel and wind power sector along with oil & gas exploration
(through a JV), coal mining, and power transmission business, JAL is likely to become a master
of all trades in the Indian Infrastructure space over the years.
Our view on JAL is based on the following arguments:
Construction
Enjoys a leadership position in Hydro Power Construction
JAL holds 54% market share in Hydropower Projects.
Considering JAL’s leadership position in Hydro power segment, it is likely to see a strong
order inflow on the wake of significant capacity addition for Hydropower (16,557 MW with
an estimated Cost of USD29bn) planned by Planning Commission of India in 11th Five year
plan.
JAL is likely to add 4620 MW Hydropower Capacity for its own plants in different locations
over the next 7‐8 years through its different subsidiaries. This entails an order inflow of
around ~Rs.320bn from its internal projects over the period.
A robust order book – ensures company’s growth potential
Current order backlog of JAL stands at USD8.55 bn, which is 23.7x times of FY08
construction revenue.
Almost 90% of total order book belongs to internal projects. Howover some of its major
projects are yet to receive financial closures i.e. Ganga Expressway Project.
JAL’s main focus is on the construction of high technology and high margin area’s
assignments like hydro power and river valley projects.
The average execution for entire projects falls between 36‐48 months once it commences.
And the margin from hydro power is between 18%‐20%.
Fig 1: Current Order Backlog along with its peers Order Book to Sales
Source: Company, Systematix Institutional Research
Cement
Capacity expansion along with captive power
JAL is likely to become the 3rd largest cement company with a pan‐India presence over FY10.
JAL intents to add 8.9 mnt in FY09E and 8.3 mnt in FY10E taking total installed capacity to
26.2 mnt by FY2010.
We consider management’s estimates to be on the aggressive side in the current scenario (it
is visible as JAL added only 2.9 mnt of capacity in first 9 months of FY09 against anticipated
addition of 8.9 mnt in FY09). We believe its new upcoming capacities will be staggered over
a period of time.
We have estimated the total capacity to be 15 mnt and 20 mnt in FY09E and FY10E
respectively and same is taken in our projections.
JAL is also setting up captive power plants to support its aggressive expansion. In F2008, 89%
of its power requirements were met by captive power plants against ~73% in F2007, thereby
enabling a substantial reduction in costs (~ Rs.2 per unit).
After commissioning all captive power plants till FY12E, JAL will be able to meet ~87% of
total power requirement from its captive power plant.
Table 1: Installed Capacity & Expected Production (In mnt)
Year Installed Capacity (mnt) Production Captive Power Plant (MW)

FY-08 9.00 6.77 88 MW
FY-09 17.90 8.08 223 MW
FY-10 26.20 18.05 340 MW
FY-11 32.80 24.50 375 MW
FY-12 32.80 32.80 375 MW
Source: Company
Sales tax and excise benefits available to the company
JAL gets sales tax benefits for intra‐state sales, which is typically around 40‐50%.
JAL’s 7 mnt capacity in Himachal Pradesh enjoys a 10‐year excise waiver offered by the
government to industries set up in the state.
Further 3 mnt capacity in UP will enjoy 10 years sales tax benefit alongwith royality
exemption for limestone mining.
JVs to ensure flyash and land availability free of cost
JAL is setting up two cement units each in Bhilai and Bokaro under the JV with SAIL (74:26)
called Bhilai Jaypee Cement Ltd ( Cost of Project = Rs.6bn for 2.2 mnt) and Bokaro Jaypee
Cement Ltd (Cost of Project = Rs.4.05bn for 2.1 mnt).
Due to this, JAL will get slag and land free of cost.
Power
Baspa and Vishnuprayag plant are running to its capacity
Baspa (Jaiprakash Hydro Power Ltd.) and Vishnuprayag (Jaiprakash Power Venture Ltd.) are
running to its capacity with more than 99% of plant availability factor, while both plants
operate at PLF of 54% and 56% respectively in FY08. And the IPP is based on 100% regulated
tariff.
Baspa plant (JAL holds 63.3%) contributes an ROE of 24% while Vishnuprayag plant (JAL
holds 80.6%) generates 26% ROE (excluding VERs).
Jaypee Power Ventures Ltd (JPVL) gets Rs.20 crore (in lieu of 1.32 mn units) under Verified
Emission Reduction (VERs) every year from Vishnuprayag Plant.
Karcham Wangtoo Hydro Power plant is expected to have Certified Emission Reduction
(CERs), which is in advanced stage and is likely to commission from 2011. As on date ~70% of
total civil construction part is done.
Huge capacity addition over the years
JAL is likely to add 7190 MW with an estimated cost of Rs.526bn by 2016 through different
subsidiaries. This includes Jaypee Nigrie Thermal (1320 MW) and Bina Power Thermal (1250
MW).
Karcham Wangtoo power plant (1000 MW) is likely to be operational from FY12 and Bina
(1250 MW) and Jaypee Nigrie Thermal plant (1320 MW) is estimated to become operational
from FY12 and FY13 respectively.
Karcham Wangtoo plant has acheived financial closure and now is under construction (~70%
is completed as on date), while Arunachal Pradesh, Meghalaya are in various stages of
obtaining financial closures and statutory approvals.
The proposed power generating business after getting fully commissioned is likely to be
highly profitable due to 42% of its commissioned capacity, which will be under merchant
power tariff and the balance of 58% under the normal regulated tariff mechanism.
Table 2: Capacity Expansion in Power Business
Project Fuel Capacity (MW) Regulated Tariff (MW) Merchant Power (MW) VERs/CERs COD
Basapa-II (JHPL) Hydro 300 300 - - 2003
Vishnuprayag Hydro 400 400 - 1.32 Mn VERs 2006
Karcham Wangtoo Hydro 1000 800 200 3.35 Mn CERs 2011
Jaypee Nigrie Thermal Thermal 1320 660 660 CERs expected 2012
Bina Power Thermal 1250 625 625 - 2011
Lower Siang Hydro 2400 1200 1200 TBD 2015
Hirong Hydro 500 250 250 TBD 2015
Kynshi Stage-II Hydro 450 225 225 TBD 2016
Umngot Stage-I Hydro 270 135 135 TBD 2016
Total 7890 4595 3295
Source: Company
Yamuna Expressway Project – Real Estate
JAL’s subsidiary Jaypee Infratech Ltd (JIL) has got 6250 acres of land in lieu of Yamuna
Expressway Project of 166 km. The land is spread across 5 different locations in NCR and UP.
JIL has got ~1078 acres of land in Noida in physical possession as on date.
Land use plan is approved for entire land of1250 acres translating into 82 mn sq ft (FSI = 1.5)
of real estate development primarily consisting of Residential (63%), Institutional (9%),
Commercial (4%), Roads (12%) and Recreational (12%).
In Yamuna Express JIL presold 4.7 mn sq ft of property as on Dec’08 and total collection from
this offtake is Rs.9.0bn.
Further in Jaypee Green JAL has presold 2.9 mn sq ft (out of 8 mn sq ft). The total collection
from the offtake is Rs.9.33bn.
Valuations
Longer end valuation looks attractive
We are of the view that JAL’s growth prospects are still intact considering its robust order
backlog and new capacity additions in its various verticals. However the financial closures for
We expect revenue and earnings some of its projects are yet to be concluded. Further a land bank of 6250 acres that JIL got in
to post a CAGR growth of lieu of Yamuna Expressway in locations of Noida, Agra and along the expressway and a land
~36.7% and ~24.3% respectively bank of 30,000 acres from Ganga Expressway Projects (Jaypee Ganga Infra. Corp. Ltd) are likely
over the period FY08-10E. to enhance the valuation of JAL. JIL has already presold an area of 4.7 mn sq ft out of 5.8 mn sq
ft (available for sale) aggregating a value of Rs.28.0bn.
We estimate JAL’s revenue and earnings to post a CAGR growth of ~36.7% and ~24.3%
respectively over the period FY08‐10E. We expect its EBIDTA margin slightly to decline from
27.5% in FY08 to ~26.0% in FY10E (a decline of 150 bps) mainly on account of increase in direct
construction, manufacturing, hotel / hospitality and power cost as % of sales. We foresee
cement business margin to decline from 40.2% in FY08 to ~30.0% in FY10E mainly on account of
price reduction and declining utilization level. JAL’s order backlog is mainly dominated from
Hydro power projects (Construction of Power Stations) which ensure comparatively better
margins (~18‐20%) than other segments. Further, most of the contracts are internal contracts.
Table 3: Valuations
FY06 FY07 FY08 FY09E FY10E
Price / Earnings (x) 11.1 17.4 12.7 13.5 9.8
Price / CEPS (x) 9.0 12.5 9.5 9.5 7.2
Price / BV (x) 0.5 0.5 1.7 1.3 1.2
EV / EBIDTA (x) 3.0 4.0 10.0 10.5 7.9
EV / Sales (x) 0.7 1.1 2.8 2.7 2.1
Fundamentals are looking intact
We expect JAL, post amalgamation to report a standalone EPS of Rs4.9 and Rs6.7 for FY09E and
FY10E respectively. Furthermore its ROE is likely to decline from 16.3% in FY08 to 13.0%, while
the ROCE is expected to be stable at ~10.6% to that of FY08.
Table 4: Key Ratios
(%) FY06 FY07 FY08 FY09E FY10E
Revenue growth 0.0% 4.6% 14.6% 38.5% 35.0%
EPS growth 0.0% -36.4% 37.5% -6.1% 37.6%
EBITDA margin 23.9% 27.1% 27.5% 25.3% 26.0%
PAT Margin 19.3% 11.9% 15.3% 12.4% 12.6%
ROE 20.8% 17.6% 16.3% 11.9% 13.0%
ROCE 13.2% 12.7% 10.6% 8.8% 10.6%
PRICE TARGET DERIVATION
We recommend 'BUY' on JAL with a 12 months price target of Rs117. Our 12‐month price target
is based on SOTP valuation methodology. We have valued its contracting business based on
Price Target for JAL is Rs.117 in
EV/EBIDTA methodology, while Cement business is valued based on EV/tonne method; we have
base case based on SOTP
methodology assumed industry EV per tonne at USD75 and 10% discount is given in our base case. Further
Power and Real Estate business is valued based on DCF and NPV methodology respectively.
At CMP of Rs.66, JAL is trading at 13.5x and 9.8x FY09E and FY10E EPS respectively. In our view
this leaves enough room for upside given the strong earnings growth projected for the
company, coupled with the growing investments in the segments as a whole.
Table 5: Details of Price target derivation
Base Case Bear Case
Methodology INR Methodology INR
Cement EV / tonne 42 EV / tonne (20% discount to Industry) 34
Total Installed Capacity = 20 mnt Total Installed Capacity = 18 mnt
Construction EV / EBIDTA 29 EV / EBIDTA (15% discount) 24

Power
Baspa DCF, Cost orf Equity = 15% 5 DCF, Cost orf Equity = 20% 4
Vishnuprayag DCF, Cost of Equity = 15% 10 DCF, Cost of Equity = 20% 8
Karcham Wangtoo DCF, Cost of Equity = 15% 11 DCF, Cost of Equity = 20% 8
Jaypee Nigrie Thermal DCF, Cost of Equity = 15% 4 DCF, Cost of Equity = 20% 2
Bina Power Thermal DCF, Cost of Equity = 15% 6 DCF, Cost of Equity = 18% 3
Real Estate
Noida RE NPV 35 NPV 22
Agra RE NPV 10 NPV 7
Jaypee Green NPV 7 NPV 6
Total 159 118
Less : Debts (Rs. Mn) 83055.8 58 58
Add : Cash 18154.4 13 13
Hotels 2.8x time of FY10E revenue 3 1.5x time of FY10E revenue 2
Value Per Share (INR) 117 75

Source: Systematix Institutional Research
Assumptions
9 For Cement business, we have considered the total installed capacity of 15 mnt and 20 mnt
in FY09 and FY10 respectively and reduced the utilization rate at 70% for FY10E.
9 We have taken USD75 as EV per tone for the industry and 10% discount of industry EV per
tone is taken in our base case.
9 We have used CAPM model for the calculation of Cost of Equity in Power Projects, where
Risk Free Rate is taken at 8% while Market Rate of Return is kept at 14%.
9 We have calculated WACC (~14.5%) for real estate valuation based of CAPM, where Risk
Free Rate and Market Rate of Return are taken as 8% and 14% respectively.
9 Perpetuity Growth rate is considered at 1%, while for Jaypee Nigrie growth rate is taken at
2%.
9 In Real Estate, we have reduced the price by ~10% over the period for Noida property in
base case while 30% in Bear case and same is with Jaypee Green Project.
9 While for Agra we have slightly increased the price from FY13E considering the upcoming
urbanization in the area. 30% discount is taken in Bear case.
9 We assumed that 1250 acres in Noida translates into 82 mn sq ft (we have 75 mn sq ft of
saleable area in our valuation considering some part of the land not to be developed) and
will complete till FY18E. Similarly for Agra (1250 acres) translated into 80 mn sq ft and will
completed till FY20E.
9 For Jaypee green (8 mn sq ft) we assumed the project to complete till FY14E.
9 We tried to value all those verticals where there is much clarity in terms of business and
financial closures. However we have not valued Captive Coal Mines, Jaypee Ganga
Infrastructures, Wind Power Projects, Arunachal Power Projects (2500 MW), Meghalaya
Power Projects (720 MW), Jaypee Powergrid Ltd, Steel Business, Carbon Credit, Oil
Exploration Business.
Yamuna Expressway real estate projects
Presently JIL has land use plan approved for entire 1250 acres at Noida translating 82 mn sq ft
of real estate development. However JIL is currently having ~1078 acres of land in physical
possession against 1250acres of land. We assumed that total real estate development at Noida
is 75 mn sq ft of land and it will take 9 years to complete the project. We have discounted the
cash flow over the period with the WACC of 14.5%.
Similarly, we assumed that JIL will be having 80 mn sq ft of developable land from its Agra
property (1250 acres of land). We expect this project to complete till FY20E. We have slightly
increased the price considering the upcoming urbanization is the area.

Jaypee Greens
JAL is developing India’s first “golf centric” real estate project in Greater Noida. Total saleable
area for the project is 8 mn sq ft, which is spread over 450 acres. Already 2.9 mn sq ft of land
has been sold as on date with an average realization of Rs.5873 per sq ft. We assumed the
project to complete over FY14E. After discounting the cash flow over the period, the value per
share works out to Rs.8.
Table 6: Valuation of Jaypee Green
FY08 FY09E FY10E FY11E FY12E FY13E FY14E
Agra (8 mn sq ft)
Sales (mn sq ft) 0.1 0.2 1 1.25 1.5 2 1.95
Selling Price (Rs/sq ft) 5873 5873 5873 5850 5265 5265 5265
Total Sales (Rs mn) 587 1175 5873 7313 7898 10530 10267
Expenses
Land 1000 1000 1000 1000 1000 1000 1000
Construction Cost 1500 1500 1500 1500 1500 1500 1500
Total Cost 250 500 2500 3125 3750 5000 4875
Taxes 111 223 1113 1382 1369 1825 1779
Net Cash Flow 226 452 2260 2806 2779 3705 3612
WACC 14.5% 14.5% 14.5% 14.5% 14.5% 14.5% 14.5%
Discount Rate 1 0.87 0.76 0.67 0.58 0.51
PV of Cash Flow 452.0 1973.7 2140.0 1851.2 2155.6 1835.6
Total PV of Cash Flow 10408.1
Value Per Share 8.1

Risks to our Target Price
Among the potential risk factors to our target price we list the following as foremost:
1. Inability to fund its capex plan to delay the revenue intake: JAL is having a capex plan of
Rs.780bn (as per our estimates) to meet its expansion plans over the next 6‐7 years. Any
kind of inability or delay to fund the projects may adversely affect our target price.
2. Fluctuation in Raw Material prices can dampen the margins: Any adverse price fluctuation
of raw material prices could impact the construction margin of JAL.
3. Escalating Competitive scenario can play spoil sport: The construction sector is highly
fragmented mainly on account of low capital intensity and low entry barriers. With increase
in the number of players and foray of smaller players into newer and bigger projects, the
construction industry is facing cut‐throat competition in the bidding process. This adds
pressure on the margin with low quotes for good quality projects.
4. Unfavourable changes in Government Policy can create headwinds for the business:
Infrastructure development is the main agenda in 11th Plan, but any change in the
government’s policy might hurt the top line as well as bottom line of the JAL i.e. Section 80
IA, what we saw in Budget 07‐08. It may even affect inflow of foreign capital into the
Infrastructure companies. However, we believe that this move is quite unlikely.
5. Travails of Hydro Project by nature: Hydro‐Power Projects are invariably located in
Mountainous Regions and have to face the direct challenges from nature, such as fury of
flood, rock fall triggered by snowfall / rain.
6. Slowdown in Cement sector: The current prevailing slowdown in cement industry and a
fear of excess supply (we assume total capacity and demand to be 274 mnT and 224 mnT in
2012) may insist JAL to defer or prolong capacity addition plan going forward.
7. Uncertainty in real estate market: If the bleak situation of real estate market prolongs
more it may adversely affect the off take and realization rate. However JAL and JIL has
presold a substantial part of total available properties at the prevailing market rate, but if
market does not improve further and realization rate correct more than 30% (we assumed
30% correction in bear case), then our real estate valuation can have a negative impact.

INDUSTRY OVERVIEW
Infrastructure sector to grow at 15% CAGR in 11th Five Yr plan
In order to save the economy from infrastructure hurdles and maintain its growth momentum,
an adequate provision of infrastructure facilities has become critical. A disruption in
Infrastructure sector to grow at infrastructure facilities or unreliable services may inhibit investments in productive capital or
a CAGR of 15% in next 5 years
restrict output. Even as a strategy for the revival of the Economy, stimulus packages are drawn
up which are now under implementation. Government is placing a major thrust on the
Infrastructure Sector which will benefit JAL in a major way.
Engineering & Construction sector to be the biggest beneficiary of the infrastructure boom
In India, construction is the 2nd largest economic activity after agriculture. The investment in
construction accounts for nearly 14% of India’s GDP, 50% of its Gross Fixed Capital Formation
(GFCF) and nearly 65% of the total investment in infrastructure. Besides, the government’s
announcements regarding the creation of a financial SPV to fund infrastructure projects
(utilizing up to 5% of forex reserves), viability gap funding, extension of PPP etc. would provide
a further impetus to this sector.
The revised draft of the Eleventh Plan Approach Paper states that investment in infrastructure
— defined as road, rail, air and water transport, power generation, transmission, distribution,
telecommunication, water supply, irrigation, and storage — would have to rise from the current
4.6 % of the country's gross domestic product (GDP) to an estimated 8.0 % during the Eleventh
Plan period to meet the GDP growth target of 8‐9 %. The total investment in this sector is
estimated to be Rs6129bn in 11th five year plan.
Fig 2: Infrastructure Segmental Investment Outlook
Source: Crisil
Cement
The cement industry accounts for approximately 1.2% of Gross Domestic Product (GDP) and
employs over 0.14 million people. It is a significant contributor to the revenue collected by both
the central and state governments through excise and sales taxes. India is the second largest
producer of cement in the world. In FY08, India produced 161 mn tn of cement, accounting for
6.4% of global cement production of 2.5 billion tonnes.
Cement consumption has strong co‐relation with economic growth and industrial activity. In
particular, cement demand is particularly linked to construction activities.
Table 7: Performance outlook of Cement Industry

Year FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08
Capacity Installed 78.1 86.8 96.3 101.5 107.6 110.6 121.4 134.9 140.1 146.6 153.9 160 170 187
Capacity Utilisation 75% 74% 73% 76% 76% 85% 77% 76% 80% 80% 83% 96% 96% 101%
Additon 6.9 8.7 9.5 5.2 6.1 3 10.8 13.5 5.2 6.5 7.3 6.1 10 17
Consumption 58.4 64.5 70 76.7 81.7 94.2 93.6 102.4 111.4 117.5 127.6 154 163 188
Cement growth % 7.90% 10.40% 8.50% 9.60% 6.50% 15.30% -0.60% 9.40% 8.80% 5.50% 8.60% 20.70% 5.80% 15.30%
Source: CMA
Table 8: Expected Cement Capacity Addition for FY09E & FY10E

(‘000 Tonnes) FY 09E Additions FY 10E Additions
North West Central East South FY 09E North West Central East South FY 10E
ACC ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3000 3000
Biral Corpn. Ltd 1700 ‐ ‐ ‐ ‐ 1700 ‐ ‐ ‐ ‐ ‐ 0
Century Textile Ltd ‐ ‐ ‐ ‐ ‐ 0 ‐ 2000 ‐ ‐ ‐ 2000
Grasim Ltd 5700 ‐ ‐ ‐ ‐ 5700 4400 ‐ ‐ ‐ 4400
Guj. Ambuja Cement ‐ ‐ ‐ ‐ ‐ 0 ‐ 3300 ‐ ‐ ‐ 3300
India Cement Ltd ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 1600 1600
J K cement ‐ ‐ ‐ ‐ 0 3000 ‐ ‐ ‐ ‐ 3000
Jaypee 3500 2400 3000 ‐ ‐ 8900 3700 2400 ‐ 2200 ‐ 8300
Kesoram Industries ‐ ‐ ‐ ‐ ‐ 0 ‐ ‐ ‐ 1650 ‐ 1650
Madras Cement ‐ ‐ ‐ ‐ 2000 2000 ‐ ‐ ‐ ‐ 2000 2000
Orient Paper Inds ‐ ‐ ‐ ‐ ‐ 0 ‐ ‐ ‐ 1000 1000
Others ‐ ‐ ‐ ‐ ‐ 0 2500 ‐ 1500 ‐ ‐ 4000
Ultra Tech Cem Co Ltd. ‐ ‐ ‐ ‐ 4900 4900 2000 ‐ ‐ ‐ 2000
Zuari ‐ ‐ ‐ ‐ ‐ 0 ‐ ‐ ‐ ‐ 2200 2200
10900 2400 3000 0 6900 23200 13600 9700 1500 4850 8800 38450
Energy & Power
India, with over a billion people, today only produces ~660 billion KWh of electricity and over
Currently India produces 600 million Indians, a population equal to the combined population of USA and EU, have no
~660bn KWh of electricity access to electricity, and limited access to other clean, modern fuels such as LPG and kerosene.
This constrained energy access is reflected in the relatively low Human Development Index of
India. Enhancing energy supply and access is therefore a key component of the national
development strategy. However, over the past decade, gains in both poverty reduction and
economic growth have been significant supported by energy growth though it has been
significantly lower than the economic growth.
Table 9: Energy outlook of India and world

World India
Energy Consumption (MTOE) 10878 423 (5th largest energy consumer)
Energy Mix (%)
Coal 28.4% 56.2%
Oil 35.8% 28.4%
Natural Gas 23.7% 8.5%
Nuclear 5.8% 0.9%
Hydro 6.3% 6.0%
Oil & Gas Imports (MTOE) - 2006 3264 119
Growth in Energy (10 Yrs)
Total Primary Energy 2.3% 5.6%
Natural Gas 2.7% 9.4%
Source: Gail Presentation, BP Statistical Review of World Energy, June 2007
India’s power generation is estimated to grow at a CAGR of 12% in 11th Five year plan to
maintain its GDP growth. Besides 100,000 MW of power generation capacity is likely to get
added in the country over FY07‐FY12 ensuring an estimasted capex of ~Rs200bn for civil works.
Furthermore a target “Power for all” in 11th Five year plan set by government entailing an
investment of ~Rs1000bn.
Fig 3: Projected Installed capacity in power sector
Capacity
Power generation is expected to (MW)
grow at a CAGR of 12% in 5 424,744
450,000
years
360,000 305,623
270,000 219,992
180,000 132,329
90,000
0
2007 2012 2017 2022
Source: Industry
COMPANY INDEPTH
An Overview
Jaiprakash Associates Limited (JAL), formerly known as Jaiprakash Industries Ltd (JIL) was
incorporated in the year 1986. Today JAL is a well diversified infrastructure industrial
conglomerate in India. It operates in its preferred businesses like Engineering and Construction
JAL is a diversified industrial (Hydro Power Construction), Cement, Hydropower generation, Hospitality, Real Estate
conglomerate having presence in Development, Expressways and Highways. In Engineering and Construction division JAL is
Engineering & Construction, understood as a pioneer in the construction of multi‐purpose river valley and hydropower
Cement, Power and Real Estate.
projects. JAL is one of the largest cement producers in Central India with an installed capacity of
11.9 mnt. After having strong presence in hydro power, it has forayed into Thermal Power
Generation, Power Transmission and Wind Power. It also owns and operates four 5 star hotels
and star Golf resorts at the Capital.
Journey in brief
Fig 4: JAL’s milestone
Source: Company
Segmental Offerings
JAL provides different set of services on Engineering & Construction, Cement, and Hydropower
generation, Hospitality, Real Estate Development, Expressways and Highways.
Fig 5: JAL’s presence in different verticals
T&D
Source: Company

Engineering & Construction:
JAL’s E&C division provides services to the construction of river valley and hydropower projects
It is currently executing 13 on turnkey basis. It is currently executing 13 various projects in hydropower, irrigation & other
various projects in hydropower / infrastructure in 6 states. Considering the immense potential present in the hydro power
irrigation / other infrastructure generation, JAL forayed into power generation on Build Own Operate (BOO) basis. JAL till now
fields in 6 states. participated in 54% new hydro power projects in Tenth Five Year Plan.
Table 10: Hydropower Capacity Commissioned by JAL from FY02-FY08 (8330 mw added to the National Grid)
Name of Projec Client & State/Country 2002-05 2005-06 2006-07 2007-08 2008-09 Total (MW)
BUILD-OWN-OPERATE
Baspa JHPL, H.P. 300 300
Vishnuprayag JPVL, Uttranchal 400 400
ENGINEERING –PROCUREMENT –CONSTRUCTION (EPC) CONTRACTS
Chamera-II NHPC, H.P. 300 300
Omkareshwar NHDC, M.P. 520 520
Baglihar JKSPDC 450 450
CONTRACTS WITH VARIOUS GOVERNMENT AGENCIES
Indira Sagar (Dam & Powerhouse) NHDC, M.P. 1000 1000
Nathpa Jakhari (Power House, Penstocks) SJVNL, HP 1500 1500
Dul-Hasti (Dam, Powerhouse & HRT) NHPC, J&K 390 390
Tehri (Rock-fill Dam & Spillways) THDC, Uttranchal 1000 1000
Teesta-V (Dam & Power House) NHPC, Sikkim 510 510
Sardar Sarovar (Main Dam & PowerHouse) SSNN, Gujarat 250 1200 1450
Tala (Powerhouse & HRT) THPA, Bhutan 1020 1020
Source: Company
Table 11: Major projects done in Engineering & Construction

Project Title Client Description
Veerbhadra Barrage Uttar Pradesh Govt Built across the river Ganga for the Garhwal-Rishikesh-Chilla Hydel project.
Canal Head Powerhouse (Narmada) Project in Gujarat Construction of Sardar Sarovar Concrete Gravity Dam, Underground Powerhouse & 4 Rock fill Dams
Trunk Sewer, Baghdad Turnkey construction of a sewerage network in Baghdad including 26 Pump Stations.
Source: Company
Cement
JAL is the largest cement producer in central India and 4th largest cement producer in the
Largest cement producer in country with an installed capacity of 9.9 mnt. It has plans to enhance cement capacity to 28.3
central India and 4th largest mnt by end of FY10 and 33 mnt by end FY11. Thus, it is likely to be the third largest cement
cement producer in the country producer in the country. Its current capacities are located at Rewa MP (3 mnt), Bela MP (2.4
with an installed capacity of 9.9 mnt), Himachal Pradesh (1 mnt) and rest (3.53 mnt) in UP. JAL has market in different states like
mnt Uttar Pradesh, Madhya Pradesh and Bihar, and also in North India, West India, West Bengal and
North East. Moreover, JAL is the largest exporter of clinker and cement to Nepal and Bhutan.
Table 12: Cement Plants with their Installed Capacities

Places mnt
Rewa MP 3.0
Bela MP 2.4
Sadva Khurd UP 0.6
Tanda UP 1.0
Chunar UP 1.5
Panipat Hariyana 1.4
Sidhi 2.0
Total current capacity 11.9
Source: Company
Energy (Hydro Power)
JAL is one of the largest private power producers in the country with 89% market share. After
JAL has so far distinctly establishing a strong presence in the Hydro‐Power Sector it has made an entry into Thermal
participated 54% of new Power Generation, Power Transmission and also forayed into Wind Power. To capitalize the
hydropower projects in 10th Five vast potential opportunities in hydro power generation, JAL ventured into private power
Year Plan generation on BOO basis. JAL has so far distinctly participated 54% of new hydropower projects
in 10th Five Year Plan. As an independent power producer JAL along with its subsidiaries and JV
partners has 9 BOO projects in hand out of which Baspa and Vishnu Prayag have already been
commissioned, while Karcham Wangtoo is currently under execution.
Further it has also made a presence in Wind Turbine Generator with an installed capacity of 49
MW (40.25 MW in Maharashtra and 8.75 WM in Gujarat). The electricity generated being sold
to MSEDC in Maharashtra and in Gujarat to GUVNL.
Table 13: A snapshot of JAL’s commissioned power plant
Project Title Client Description
Baspa Hydroelectric Project 300mw Govt of Himachal Pradesh India's Largest Private Sector Hydro-Power Project on BOO basis was commissioned on June 2003 at a project cost
of Rs 16247 mn and has since been generating power.
Vishnu Prayag Hydroelectric Project 400 mw Govt of Uttarakhand It is a BOO project commissioned in Oct 06, located across the Alaknanda, has an underground power station. The
project cost is Rs316940mn
Source: Company
Real Estate
Yamuna Expressway Project
JAL has been awarded Yamuna Expressways project on BOT basis last year. Yamuna Expressway
with a length of 165 km, 6 lane super expressway between Noida and Agra is estimated an
outlay of Rs.60bn. The concession period for the project is for 36 years. Along with this, Jaypee
Infratech Ltd has received 6250 acres of land (272 mn sq ft) in different locations like Noida,
Agra and land along the expressway to develop residential/industrial/institutional purposes.
Table 14: Location wise land for real estate development
Locations Area (acres)
Noida 1250
Dhankaur 1250
Mirzapur 1250
Tappal 1250
Agra 1250
Source: Company
Ganga Expressway Project
This is the largest private sector infrastructure BOT project in India awarded to JAL last year.
This is 1047 Km expressway in UP along the left bank of the river Ganga connecting Greater
Noida to Ballia. The estimated cost for the project is Rs.600bn while the concession period is 35
years.
Following the Yamuna Expressway model JAL’s 100% owned subsidiary Jaypee Ganga Infra.
Corp. Ltd has got the right to develop of an estimated 30000 acres of land along the
Expressway. JAL has given us to understand that the total real estate developable area is
translated to 3.3 bn sq ft after considering the FSI of 1.5. Moreover around 18000 acres of land
lies in Etah, which is 160 km away from Delhi. Etah is considered as one of the premium
locations in UP.

Jaypee Green
JAL has diversified its interest in the development of real estate with a different kind of passion.
The main idea was to give the residents a feel of resort living at the Jaypee Greens residential
community. Jaypee Greens Greater Noida was India’s First Golf Centric integrated township
spread 450 plus acres of land comprising one 18 hole and two 9 hole golf facility. It caters to the
high‐end consumers and also to the mid segment of the society with various facility like
commercial complex, medical facilities, educational facilities that range from Kindergarden to
Pre‐university levels, host of recreational facilities like social clubs, entertainment zone etc.
Hospitality
JAL owns and operates four 5 star hotels, 2 in the national capital, New Delhi and one each in
Agra and Mussorrie and also a five star Golf resort at Greater Noida, with a total capacity of 750
rooms.
Table 15: Jaypee Hotel Ltd
Jaypee Hotel Ltd Room Available (Inventory) Avg Room Rate per day Occupancy rate
Hotel Siddharth, Delhi 99 9000 82%
Hotel Basant, Delhi 120 8500 80%
Hotel Jaypee Palace, Agra 350 9500 82%
Jaypee Residency Manor, Agra 180 8500 80%
Source: Company
Power Transmission – Jaypee Powergrid Ltd (JPL)
JPL a JV (51:23:24) between Jaiprakash Hydro Power ltd (51%), JPVL (23%) and Powergrid
Corporation of India Ltd (26%) is setting up a Transmission Line for evacuation of power from
the Karcham Wangtooproject. Central Electricity Regulatory Commission has already granted
Transmission License to the entity. The proposed transmission line of 234 km will be a 400kV
inter‐state line connecting Jaiprakash Power Ventures Ltd's Karcham Wangtoo project to the
400/200kV substation of PGCIL at Abdullapur in Yamuna Nagar district of Haryana. Power will
be supplied to Himachal Pradesh, Haryana, Punjab, Uttar Pradesh and Rajasthan.
Iron and Steel (Malvika Steels Ltd.)
JAL has taken possession of the assets of Malvika Steels Limited at Jagdishpur in UP with a cost
of Rs.2070mn, which was put up for sale through an open auction by the Debt Recovery
Tribunal (DRT). This acquisition and revival of the Steel Plant would be a step in the direction of
backward integration. JAL has chalked out a plan to commission a 5.5 lakh tonne per annum pig
iron facility at Jagdishpur by March 2009 with an additional investment of Rs.12bn and
production of longs would begin by March 2010.
Wind Power Plant
JAL has fully commissioned its Wind Turbine Generators with an aggregate capacity of 49 MW
(40.25 MW in Maharashtra and 8.75 MW in Gujarat) as on March 2008 with a cost of Rs.2.4bn.
Out of the total installed capacity of 49 MW, 16.25 MW (13 Generators, each with a capacity of
1.25 MW) was commissioned at Dhule, Maharashtra during December 2006 to March 2007. The
remaining 32.75 MW was commissioned at Sangli, Maharashtra (24 MW ‐ 16 Generators, each
with a capacity of 1.5 MW) during September 2007 to March 2008 and at Kutch, Gujarat (8.75
MW ‐ 7 Generators, each with a capacity of 1.25 MW) in March 2008. The electricity generated
is being sold to Maharashtra State Electricity Distribution Company Ltd. in Maharashtra and
Gujarat Urja Vikas Nigam Limited in Gujarat.

Oil and Natural Gas
JAL recently entered into oil and natural gas business by picking up a 45% stake held by ICICI
Bank and ICICI Ventures in Prize Petroleum Corporation Ltd, a subsidiary of Hindustan
Petroleum Corporation. The GoI has awarded the South Reva Basin in MP with an approximate
area of 13,000 sq Km for exploration and development of on‐shore Oil‐Gas Block to the
consortium of JAL and Prize Petroleum Corporation Ltd (PPCL). JAL has 90% stake in the JV,
while PPCL is having 10%. PPCL enjoys a vast experience in the field of Oil and Gas exploration
and will act as the Operator.
Fig 6: Corporate Structure of JAL
Source: Company
Table 16: JAL’s subsidiaries with their respective business activities

Subsidiaries Business activities
Jaiprakash Hydro-Power Ltd (63.34%) 300 MW Baspa Power Station

Jaiprakash Power Ventures Ltd (80.56%) 400 MW Vishnuprayag Power Station
Jaypee Karcham Hydro Corporation Ltd (100%) Karcham Wangtoo Hydro-electric Project (1000 MW)
Jaypee Powergrid Ltd (74%) JV between Jaiprakash Hydro-Power Ltd and Powergrid Corporation of India Limited is setting up the Transmission
Line for evacuation of Power from the Karcham Wangtoo Project.
Madhya Pradesh Jaypee Minerals Ltd (70%) MPJML, a JV with Madhya Pradesh State Mining Corporation Limited (MPSMCL), to develop and mine coal from the
Coal Block at Amelia (North) in M.P.
Jaypee Infratech Ltd (98.96%) w.e.f. 05.04.2007 A wholly owned subsidiary for implementation of 160 km long 6-lane Taj Expressway Project BOOT basis.
Bhilai Jaypee Cement Ltd (74%) w.e.f. 11.04.2007 BJCL,a Joint Venture between the Company and Steel Authority of India Ltd. (SAIL) to set up a 2.2 million tonne per
annum capacity, located at Bhilai in Chattisgarh and at Babupur, Satna in Madhya Pradesh.
Himalyan Expressway Ltd (100%) w.e.f. 25.05.2007 Zirakpur- Parwanoo Road Project in the States of Punjab, Haryana and Himachal Pradesh on BOT basis under
NHDP Phase-IIIA
Gujarat Jaypee Cement & Infrastructure Ltd (100%)
w.e.f. 26.12.07 Agreement with Gujarat Mineral Development Corporation Limited (GMDCL) to set up 2.4 mn tones pa Cement
manufacturing plant with captive power station and captive Jetty in Kutch Distt. of Gujarat.
JPSK Sports Pvt Ltd (61.70%a) w.e.f. 07.03.2008 for developing a Greenfield state-of-the-art Sports Complex including Car Race track suitable for Formula One race
with related integrated support infrastructure including Township(s) and auxiliary facilities
Bokaro Jaypee Cement Ltd (74%a) w.e.f. 13.03.2008 The second JV between the Company and SAIL with management to set up a 2.1 mn tone pa capacity Cement Plant
at Bokaro in Jharkhand.
Jaypee Ganga Infrastructure Corp Ltd (100%) w.e.f. 18.03.2008 Connects Greater Noida with Ghazipur- Ballia, Ganga Expressway Project.
Source: Company
Equity History
Table 17: Equity Outlook
Date Reason Equity Capital (mn)
3/31/1999 As per Annual Report 675.0
9/30/2000 Private Placement 2000.0
3/31/2002 Equity Share Issued 2090.0
FY05 Share Issued on Amalgamation 881.1
FY06 Bond Conversion 950.9
FY09 till date Bond & Warrant Conversion 1183.5
FY09E Share Issued on Amalgamation &
Warrant Conversion (40 mn) 1441.5
FY10E Bond Conversion (FCCB) 1506.0

Recent Amalgamation
JAL has approved the amalgamation of Jaypee Cement Ltd (JCL), Gujarat Anjan Cement Ltd
(GACL), Jaypee Hotels Ltd (JHL) and Jaiprakash Enterprises Ltd (JEL)) with Jaiprakash Associates
Ltd, with effect from April 01, 2008. This amalgamation is basically done to get the synergy for
itself as the cross‐holding of companies’ shares will be transferred to a trust. The benefit of
shares held in the trust shall accrue to Jaiprakash Associates Ltd.
Benefits of post amalgamation
9 Merger will bring cement business under one roof.
9 This will help company effectively deal with demand‐supply mismatch in different regions.
9 Move will help company avoid dividend distribution tax.
9 Increase in equity base will resolve the funding issue of JAL to a certain extent.
Table 18: Post amalgamation Shares Issuances and Treasury Stock
O/s Equity (mn) Current Current Shares Held Swap ratio Shares Issuance Treasury Stock Post Amalgamation
(mn) Ownership by JAL (mn) (mn) (mn)
JAL 1183.5 1223.5 1183.5
JCL 506 100% 506 1:10 51 51 51
GACL 350 95% 333 1:11 32 30 32
JHL 55.5 72% 40 1:1 55 40 55
JEL 26.7 0% 0 3:1 80 80 80
218 201 1402
Table 19: JAL’s shareholding post amalgamation

(mn) Pre Amalgamation % Shareholding Post Amalgamation % Shareholding
Promoters 536 45% 536 38%
Trust 0 0% 201 14%
Public 648 55% 665 47%
1184 100% 1402 100%

EARNINGS OUTLOOK & FINANCIALS
Standalone revenue to grow at a CAGR of ~36.7% over FY8‐10E
JAL’s standalone revenue is estimated to grow at a CAGR of ~36.7% over FY08‐FY10E mainly on
JAL’s standalone revenue is
estimated to grow at a CAGR of
account of substantial contribution from Cement and Construction segment. Cement and
~36.7% over FY08-FY10E Construction revenue is estimated to grow at a CAGR of ~26.8% and ~39.2% respectively over
FY08‐FY10E.
Table 20: Sales Growth- heading to a northward journey
Sales FY06 FY07 FY08E FY09E FY10E
Cement Sales (Net) 12,206.3 18,185.1 19,023.9 24,135.3 30,571.3
% net sales 36.7% 52.3% 47.7% 43.7% 41.0%
% yoy growth 49.0% 4.6% 26.9% 26.7%
Construction Revenue 19,206.7 16,107.2 17,301.9 25,432.5 33,545.0
% net sales 57.8% 46.3% 43.4% 46.1% 45.0%
% yoy growth -16.1% 7.4% 47.0% 31.9%
Real Estate Revenue - - 2,558.3 2,936.5 5,873.0
% net sales 0.0% 0.0% 6.4% 5.3% 7.9%
Hotel / Hospitality Revenue 1,832.1 293.5 305.8 1,877.3 3,621.1
% net sales 5.5% 0.8% 0.8% 3.4% 4.9%
% yoy growth -84.0% 4.2% 513.9% 92.9%
Power - 64.6 181.1 300.5 321.9
% net sales 0.0% 0.2% 0.5% 0.5% 0.4%
% yoy growth 180.3% 65.9% 7.1%
EBIDTA margin and net margin to decline
We expect the operating margin to see a decline mainly on account of margin contraction from
cement business along with the increase in direct construction cost. EBIDTA margins are
expected to decline from 27.5% in FY08 to ~26.0% in FY10 (a decline of 150 bps). Further JAL’s
net profit is expected to grow at a CAGR of ~24.3% over FY08‐FY10E, but net margin is likely to
decline from ~15.3% in FY08 to 12.6% in FY10E (a decline of 270 bps) mainly on account of
higher interest cost and tax expenditures (we assumed full tax rate). We assumed real estate
prices to decline almost by ~25 by FY10. However JAL’s has presold a substantial part of its
Jaypee Green property at higher prevailing rate, so we do not expect its real estate margin to be
be affected at the initial years of revenue recognition.
Fig 7: EBIDTA margin outlook Fig 8: Net margin outlook

Debt Equity still to provide leveraging opportunity
Debt Equity ratio that merits attention to most of the lenders in present scenario is quite benign
We expect JAL should not have for JAL which stands at 1.5x times in the current year. We expect JAL should not have any issues
any issues to raise loans to funds
to raise loans to fund its upcoming projects once lending scenario improves.
its upcoming projects once
lending scenario improves Fig 9: Debt / Equity scenario
9M & Q3FY09 STANDALONE RESULTS ANALYSIS
Jaiprakash Associates Ltd. (JAL) has reported a standalone topline growth of ~46% at
Rs.13806.3mn on yoy basis mainly because of its brisk execution in construction
activities (construction segment revenue posted a growth of 71% on yoy basis).
Operating profit has grown from Rs.2659.1mn to Rs.3062.0mn in Q3FY09 on yoy basis
(a growth of 15.2%), while EBIDTA margin has significantly decline from 29.6% in
Q3FY08 to 23.2% in Q3FY09. This is on account of significant jump in Employee Cost
and Direct Manufacturing Cost.
Whereas on 9 months basis EBIDTA margin stands at 28.6% ( a decline of 130 bps on
yoy basis), which is mainly on account of the strong operating margin posted by
construction segment in previous quarters (Construction segment had posted an EBIT
margin of 31.2%).
Net Profit has grown marginally by 6.2% on yoy basis at Rs.1655.1mn, whereas net
margin declined by 480 bps at 12.5% in Q3FY09. While on 9 months basis net margin
stands at 13.6%.
Earning Per Share (Basic) of JAL has net seen any growth and stands at Rs.1.41, whereas
in 9 Months basis EPS (Basic) has posted a growth of ~18% at Rs.4.22 on yoy basis.
Cement segment’s EBIT has posted a degrowth of 7%, while Construction segment EBIT
has grown by ~42% on yoy basis.
Real Estate segment have been the prominent performer for the quarter which
maintained an EBIT margin of ~41% for the quarter, while the EBIT stands at
Rs.272.3mn, which is ~11% of total EBIT reported by JAL.
Table 21: 9M & Q3FY09 result
(Rs in mn) Q3FY09 Q3FY08 % yoy growth 9MFY09 9MFY08 % yoy growth
Net Sales 13216.9 8997.9 46.9% 36530 27047.1 35.1%
Other Operating Income 589.4 430.9 36.8% 1372.7 1113.9 23.2%
Total Income 13806.3 9428.8 46.4% 37902.7 28161.0 34.6%
Expenditures
(Increase) / Decrease in WIP 16.8 -247 -106.8% -126.2 -86.1 46.6%
Dicrect Const., Mfg, Hotel/Hospitality
and power Expenses 7548.2 4969.2 51.9% 19690.1 13637.1 44.4%
Employee Cost 1226.7 570.8 114.9% 2648.7 1870.6 41.6%
Other Expenditures 1952.6 1476.7 32.2% 5244.1 4642 13.0%
Total Expenditures 10744.3 6769.7 58.7% 27456.7 20063.6 36.8%
EBIDTA 3062.0 2659.1 15.2% 10446.0 8097.4 29.0%
EBIDTA margin (%) 23.2% 29.6% 28.6% 29.9%
Depreciation 646.1 511 26.4% 1934.3 1422.5 36.0%
EBIT 2415.9 2148.1 12.5% 8511.7 6674.9 27.5%
EBIT margin (%) 18.3% 23.9% 23.3% 24.7%
Interest 991.7 787.9 25.9% 2983.5 2418 23.4%
Other Income 664.9 586.9 13.3% 1316 1122.6 17.2%
PBT 2089.1 1947.1 7.3% 6844.2 5379.5 27.2%
Tax 434 389 11.6% 1885.2 1386.9 35.9%
% Tax 20.8% 20.0% 27.5% 25.8%
PAT 1655.1 1558.1 6.2% 4959.0 3992.6 24.2%
Net Margin (%) 12.5% 17.3% 13.6% 14.8%
EPS (Basic) 1.41 1.4 0.7% 4.22 3.59 17.5%
EPS (Diluted) 1.29 1.36 -5.1% 3.88 3.49 11.2%
Source: Company
Table 22: Segmental revenue break up

Q3FY09 Q3FY08 % yoy growth 9MFY09 9MFY08 % yoy growth
Cement 5773.3 5003.9 15.4% 16809.4 14738.7 14.0%
Construction 7517 4403.2 70.7% 19346.6 13200.3 46.6%
Wind Power 36.6 10.1 262.4% 236.7 75.9 211.9%
Hotel/Hospitality 73.1 84.6 -13.6% 225 249.3 -9.7%
Real Estate 664.3 0 1677 0
Investments 664.9 586.9 13.3% 1316 1122.6 17.2%
Unallocated 71.3 148.5 -52.0% 415.1 536 -22.6%
Total 14135.6 9650.3 46.5% 38709.8 28800.2 34.4%
Less : Inter-Segment Revenue 329.3 221.5 48.7% 807.1 639.2 26.3%
Total Income 13806.3 9428.8 46.4% 37902.7 28161 34.6%
Source: Company
Table 23: Segmental EBIT margin

Q3FY09 Q3FY08 % yoy growth 9MFY09 9MFY08 % yoy growth
Cement 1551.6 1658.8 -6.5% 4662.6 4822.7 -3.3%
Margin 26.9% 33.2% 27.7% 32.7%
Construction 919.4 648.2 41.8% 4077 2369.1 72.1%
Margin 12.2% 14.7% 21.1% 17.9%
Wind Power 20.9 1.6 1206.3% 149.3 43.8 240.9%
Margin 57.1% 15.8% 63.1% 57.7%
Hotel/Hospitality 12.8 11.1 15.3% 24.3 29.4 -17.3%
Margin 17.5% 13.1% 10.8% 11.8%
Real Estate 272.3 0 644.8 0
Margin 41.0% 38.4%
Investments 664.9 586.9 13.3% 1316 1122.6 17.2%
Margin 100.0% 100.0% 100.0%
Source: Company
FINANCIAL
DETAILS
Profit & Loss Balance Sheet (Rs mn) FY06 FY07 FY08 FY09E FY10E
Statement (Rs mn) FY06 FY07 FY08 FY09E FY10E Share Capital 2,150.6 2,192.4 2,343.0 2,802.9 2,802.9
Net Sales 33,245.1 34,779.2 39,851.1 55,186.4 74,487.2 Reserves & Surplus 24,671.4 26,537.1 39,652.0 65,910.8 73,386.8
% yoy growth 5% 15% 38% 35% Equity Warrants Upfront Payment - - 3,985.0 - -
Total Cost 25,301.2 25,352.4 28,881.0 41,247.3 55,107.1 Total Shareholder's funds 26,822.0 28,729.5 45,980.0 68,713.7 76,189.6
EBIDTA 7,943.9 9,426.8 10,970.1 13,939.0 19,380.1 Secured Loans 27,213.8 36,859.5 46,403.0 65,874.9 69,874.9
EBIDTA Margin (%) 23.9% 27.1% 27.5% 25.3% 26.0% Unsecured Loans 14,984.0 18,071.6 36,652.8 38,652.8 39,652.8
Depreciation 1,514.6 1,630.5 2,033.0 2,852.6 3,389.8 Total Debt 42,197.8 54,931.1 83,055.8 104,527.7 109,527.7
Interest 2,397.4 2,572.5 3,391.4 4,181.1 5,476.4 Deferred Tax Liability 4,901.8 4,994.3 5,711.5 6,531.7 7,469.7
Other Income - 975.3 2,887.8 2,809.5 3,774.6 TOTAL LIABILITIES 73,921.6 88,654.9 134,747.3 179,773.0 193,187.0
PBTA 4,031.9 6,199.1 8,433.5 9,714.8 14,288.4 Gross Block 36,637.6 42,019.3 51,662.4 82,564.8 90,467.2
Amortization of Tools - - - - - Less: Accumulated
PBT 4,031.9 6,199.1 8,433.5 9,714.8 14,288.4 Depreciation 11,960.9 12,799.7 14,547.3 17,399.9 20,789.7
Profit on sale of shares of JHPL 3,613.7 - - - - Net Block 24,676.7 29,219.6 37,115.1 65,164.9 69,677.4
Tax 1,245.7 2,050.1 2,336.8 2,868.6 4,868.2 CWIP 8,760.6 21,862.0 42,190.1 54,847.1 60,331.8
% Tax 30.9% 33.1% 27.7% 29.5% 34.1% Investments 15,570.4 17,787.4 32,248.3 27,823.6 27,823.6
Net Profit 6,399.9 4,149.0 6,096.7 6,846.2 9,420.3 Deferred Tax Asset 69.8 93.2 114.9 200.0 220.0
YoY Growth (%) -35% 47% 12% 38% Inventories 6,013.3 8,061.6 9,813.0 13,701.6 18,460.7
Net Profit Margin (%) 19.3% 11.9% 15.3% 12.4% 12.6% Sundry Debtors 4,223.8 4,520.5 5,861.8 8,435.5 11,343.8
Cash & Bank 16,698.0 14,298.1 18,154.4 22,440.9 20,143.2
Loans & Advances 9,117.9 10,985.0 22,219.4 25,030.1 26,684.5
Other Current Assets 34.0 125.3 319.0 330.0 350.0
Projects under development 6,111.3 5,004.0 3,261.7 3,597.4 3,988.6
Cash Flow Statement (Rs mn) FY06 FY07 FY08 FY09E FY10E Total Current Assets 42,198.3 42,994.5 59,629.3 73,535.5 80,970.9
PBT 4,031.9 6,199.1 8,433.5 9,714.8 14,288.4 Current Liablities 15,368.8 20,262.4 33,490.9 38,339.6 42,273.3
Depreciation / Amortisation 1,548.6 1,664.3 2,072.7 2,852.6 3,389.8 Provisions 1,990.3 3,040.7 3,060.5 3,459.5 3,564.5
Increase in Borrowings 2,397.4 2,572.5 3,391.4 4,181.1 5,476.4 Net Current Assets 24,839.2 19,691.4 23,077.9 31,736.5 35,133.1
Loss on sale of Fixed Assets 163.1 176.4 171.8 - - Miscellaneous Expenditures 5.1 1.4 1.0 1.0 1.0
Others (1,592.3) (947.4) (2,683.2) (3,990.2) (6,464.2) TOTAL ASSETS 73,921.8 88,655.0 134,747.3 179,773.0 193,187.0
Cash before working capital
Valuation Ratio FY06 FY07 FY08 FY09E FY10E
changes 6,548.7 9,664.9 11,386.2 12,758.3 16,690.5
Increase/(Decrease) in WC (2,351.6) 103.8 332.0 (4,771.1) (5,799.3) P/E 11.1 17.4 12.7 13.5 9.8
Cashflow from operations 4,197.1 9,768.7 11,718.2 7,987.3 10,891.1 P/CEPS 9.0 6.8 4.7 4.8 4
Direct Tax Paid (1,240.1) (1,981.1) (1,641.3) (2,043.0) (3,692.1) P/BV 0.5 1.4 1.2 1 0.9
FBT paid - - - - - EV/EBIDTA 3.0 6 5.1 3.5 1.7
Net Cash used in Operating EV/Sales 0.7 0.8 0.8 0.5 0.3
Activities 2,957.0 7,787.6 10,076.9 5,944.3 7,199.0 DPS 2.70 3.60 0.98 0.96 1.22
Capital expenditure (6,920.7) (19,586.1) (30,701.3) (40,657.0) (10,484.7) Average shares (mn) 215 219 1172 1401 1401
Other Investing activities 4,539.5 (1,172.1) (11,551.4) 7,234.2 3,774.6 Market cap (Rs mn) 14,194 14,470 77,320 92,495 92,495
Cashflow from investing (2,381.2) (20,758.2) (42,252.7) (33,422.8) (6,710.2) Enterprise value (Rs mn) 24,123 37,315 109,974 146,758 154,056
Increase in capital 139.6 41.8 150.6 459.8 -
Ratio Anlaysis FY06 FY07 FY08 FY09E FY10E
Increase in Security Premium 3,160.4 946.4 8,366.8 - -
Basic EPS (Rs) 6.0 3.8 5.2 4.9 6.7
Increase in borrowings 20,328.9 25,094.2 45,505.0 21,471.9 5,000.0
Adjusted EPS (Rs) 5.9 3.7 5.0 4.5 6.3
Repayment of Borrowings (11,561.7) (12,167.1) (17,380.4) (4,067.2) (306.5) CEPS (RS) 7.4 5.3 6.9 6.9 9.1
Other financing activities (3,269.7) (3,344.6) (609.9) 13,900.5 (7,480.0) BV (RS) 124.7 131.0 39.2 49.0 54.4
Cashflow from financing 8,797.5 10,570.7 36,032.1 31,765.0 (2,786.5) Sales growth % 4.61% 14.58% 38.48% 34.97%
Increase/(Decrease) in cash 9,425.7 (2,399.9) 3,856.3 4,286.5 (2,297.6) EPS growth % -36.41% 37.50% -6.13% 37.60%
EBIDTA margin % 23.9% 27.1% 27.5% 25.3% 26.0%
PAT margin % 19.3% 11.9% 15.3% 12.4% 12.6%
ROE 20.8% 17.6% 16.3% 11.9% 13.0%
ROCE 13.2% 12.7% 10.6% 8.8% 10.6%
Debt:Equity (x) 1.6 1.9 1.8 1.5 1.4
For any queries please feel free to contact us
Institutional Team
R. Ganesh Director & CEO +91-22-3029 8250 ganesh@systematixshares.com

Equity Sales
Sharmila Joshi VP – Sales +91-22-3029 8254 sharmilajoshi@systematixshares.com
Nikhil Khandelwal VP – Sales +91-22-3029 8263 nikhil@systematixshares.com
Ronak Maniar Senior Manager +91-22-3029 8251 ronakm@systematixshares.com
Equity Research Telephone: + 91-22- 3029 8000
ANALYST SECTOR ALLOCATION DIRECT NOS. E-MAIL
Eric Martins Sr. Research Analyst - Metals, Shipping & Logistics, Pipes + 91-22- 3029 8253 eric@systematixshares.com
Abhinav Khandelwal Sr. Research Analyst - Engineering, Offshore Services + 91-22- 3029 8261 abhinav@systematixshares.com
Jyoti Khatri Sr. Research Analyst - Banking + 91-22- 3029 8187 jyotikhatri@systematixshares.com
Rabindra Nath Nayak Sr. Research Analyst - Power, Gas Utilities + 91-22- 3029 8260 rabindranayak@systematixshares.com
Madhu Babu Sr. Research Analyst - IT, Telecom + 91-22- 3029 8258 madhu@systematixshares.com
Binod Modi Research Analyst - Cement, Construction & Real Estate + 91-22- 3029 8264 binodmodi@systematixshares.com
Kavita Rawat Research Analyst - Hotels, Retail, FMCG + 91-22- 3029 8259 kavitar@systematixshares.com
Parrichay Goel Research Analyst - Auto & Auto Ancillaries + 91-22- 3029 8292 parrichayg@systematixshares.com
Rohit Jain Research Analyst - Metals, Pipes + 91-22- 3029 8269 rohitj@systematixshares.com
Vinod Birla Research Associate - Capital Goods, Agri + 91-22- 3029 8275 vinodbirla@systematixshares.com
Atul Pandit Research Associate - Large Caps + 91-22- 3029 8256 atulpandit@systematixshares.com
Basanth Patil Research Associate - Cement, Real Estate, Infrastructure + 91-22- 3029 8183 basanthp@systematixshares.com
Derivatives
Raghvendra Kedia VP – Sales (Derivatives) +91-22-3029 8091 rkedia@systematixshares.com
Shaurya Chandra Sr. Derivative Analyst + 91-22- 3029 8186 shauryac @systematixshares.com
Manoj Murlidharan Derivative Analyst + 91-22- 3029 8272 manojm@systematixshares.com
Dealing
Vinod Bhuwad Asst. Manager + 91-22- 3029 8267 vinodbhuwad@systematixshares.com
Sneha Kamat Dealer + 91-22- 3029 8268 snehakamat@systematixshares.com
Nilesh Thakkar Derivative Dealer + 91-22- 3029 8184 nilesht@systematixshares.com
Nayan Narnoli Derivatives Dealer + 91-22- 3029 8180 nayan@systematixshares.com
Stock Ratings
BUY (B) The stock's total return is expected to exceed 20% over the next 12 months.
ACCUMULATE (A) The stock's total return is expected to be within 10-20% over the next 12 months.
REDUCE (R) The stock's total return is expected to be within0-10% over the next 12 months.
SELL (S) The stock's is expected to give negative returns over the next 12 months.
NOT RATED (NR) The analyst has no recommendation on
the stock under review.
Industry Views
ATTRACTIVE (AT) Fundamentals /Valuations of the sector is expected to be attractive over the next 12-18 months.
NEUTRAL (NL) Fundamentals /Valuations of the sector are expected to neither improve nor deteriorate over the next 12-18 months.
ANALYST DISCLAIMER
This document has been prepared by Systematix Shares & Stocks (I) Ltd. This report is the personal information of the authorized recipient and does not construe to be any investment, legal or
taxation advice to you. This document does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
We, at Systematix Shares & Stocks (I) Ltd., have prepared this report based on the data we consider reliable, but we do not vouch it to be accurate or complete, and it may not be relied upon as
such. Systematix Shares & Stocks (I) Ltd does not in any way be responsible for any loss or damage that may arise to any person due to the content in the report. Each recipient of this document
should make an independent valuation of their own in the securities referred to in this report.
Besides, the data in this document is subject to change without prior notice and is intended only for the person or entity to which it is addressed to and may contain confidential and/or privileged
material and is not for any type of circulation. Any review, retransmission, or any other use of the report and the content within, is prohibited.
Disclosure of Interest
1. The analysts who have prepared the report have in no way received or are expected to receive any compensation from the subject company.
2. The analysts do not hold any position in the subject company’s stock, as on the date of release.
3. Neither the company nor an affiliate company of Systematix Shares & Stocks (I) Ltd. has received a mandate from the subject company.
4. Systematix Shares & Stocks (I) Ltd., or its affiliates do not hold any paid up capital in the company
SYSTEMATIX SHARES & STOCKS (I) LTD.

nd
Head Office J. K. Somani Building, 2 Floor, British Hotel Lane, Registered Office EGA Trade Center, 4th Floor, 809-, Poonamalle High Road,
Fort, Mumbai, Pin: 400001, Tel: +91 22 66198000, Fax: +91 22 66198029 Kilpauk, Chennai, Pin: 600010Tel: +91 44 26612184/ 87/ 88Fax: +91 44 26612190

Jaiprakash Associates LTD - Initiating Coverage (Feb'09)

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Jaiprakash Associates LTD - Initiating Coverage (Feb'09)

Загружено:

Авторское право:

Доступные форматы

Systematix

INITIATING COVERAGE Jaiprakash Associates Ltd. February 4, 2009

Industry Engineering &

Source: Company, Systematix Institutional Research

Year Installed Capacity (mnt) Production Captive Power Plant (MW)

Construction EV / EBIDTA 29 EV / EBIDTA (15% discount) 24

Hotels 2.8x time of FY10E revenue 3 1.5x time of FY10E revenue 2

Value Per Share (INR) 117 75

Table 7: Performance outlook of Cement Industry

Table 8: Expected Cement Capacity Addition for FY09E & FY10E

Table 9: Energy outlook of India and world

Table 11: Major projects done in Engineering & Construction

Table 12: Cement Plants with their Installed Capacities

of Rs 16247 mn and has since been generating power.

Table 16: JAL’s subsidiaries with their respective business activities

Jaiprakash Hydro-Power Ltd (63.34%) 300 MW Baspa Power Station

Table 19: JAL’s shareholding post amalgamation

Source: Company, Systematix Institutional Research

Table 22: Segmental revenue break up

Table 23: Segmental EBIT margin

R. Ganesh Director & CEO +91-22-3029 8250 ganesh@systematixshares.com

SYSTEMATIX SHARES & STOCKS (I) LTD.

Вам также может понравиться