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    JP Associates LTD.

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    AKHIL1211
    The document provides a technical outlook and analysis on JP Associates Ltd. It initiates a buy recommendation on the stock with medium term targets of Rs. 2000 and long term targets of Rs. 2400. The stock has formed an inverted head and shoulders pattern on the weekly chart and is taking strong support from the neckline breakout. The potential upside and growth drivers for the company are also summarized, including its cement capacity expansion, engineering and construction order backlog, and land holdings from infrastructure projects. Risks to the investment thesis are also outlined.

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    JP Associates LTD.

    Uploaded by

    AKHIL1211
    12 views13 pages
    The document provides a technical outlook and analysis on JP Associates Ltd. It initiates a buy recommendation on the stock with medium term targets of Rs. 2000 and long term targets of Rs. 2400. The stock has formed an inverted head and shoulders pattern on the weekly chart and is taking strong support from the neckline breakout. The potential upside and growth drivers for the company are also summarized, including its cement capacity expansion, engineering and construction order backlog, and land holdings from infrastructure projects. Risks to the investment thesis are also outlined.

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    jpass 06-11-2007

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    The document provides a technical outlook and analysis on JP Associates Ltd. It initiates a buy recommendation on the stock with medium term targets of Rs. 2000 and long term targets of Rs. 2400. The stock has formed an inverted head and shoulders pattern on the weekly chart and is taking strong support from the neckline breakout. The potential upside and growth drivers for the company are also summarized, including its cement capacity expansion, engineering and construction order backlog, and land holdings from infrastructure projects. Risks to the investment thesis are also outlined.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    12 views13 pages

    JP Associates LTD.

    Uploaded by

    AKHIL1211
    The document provides a technical outlook and analysis on JP Associates Ltd. It initiates a buy recommendation on the stock with medium term targets of Rs. 2000 and long term targets of Rs. 2400. The stock has formed an inverted head and shoulders pattern on the weekly chart and is taking strong support from the neckline breakout. The potential upside and growth drivers for the company are also summarized, including its cement capacity expansion, engineering and construction order backlog, and land holdings from infrastructure projects. Risks to the investment thesis are also outlined.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 13

    JP Associates Ltd.

    ,
    Technical Outlook

    Buying level :1380-1500.


    Medium Term Target : 2000
    Long term target : 2400

    We Initiate Buy on current levels .

    The scrip has formed a inverted head &


    Shoulder on weekly chart and is taking
    A strong support from neckline brake out.
    We initiate to accumulate in every dip and will
    Attain the targets respectively.
    JP Associates Ltd.,
    Potential upside from Taj Expressway — Even though the entire Taj
    Expressway related land parcels could be worth Rs478, we think it is
    prudent to only include Rs285 for the two Noida parcels. We could
    consider including the remaining parcels when we get closer to the
    allocation dates or in case of a government notification to this effect. This
    could imply a further upside of Rs194. 24.1 MMTPA of cement by FY11E
    — We expect JPA to have cement capacity of 24.1 MMTPA by FY11E,
    making it one of the largest cement players in India.

    FY08E is likely to be the year of peak realizations and EBITDA margins in line
    with our view on the cement industry. JPA’s rapidly expanding capacity
    should provide support to cement numbers when oversupply hits the
    markets.
    Strong E&C order pipeline — JPA’s E&C division ended FY07 with an order
    backlog of Rs115bn (6.9x FY07 sales). Order inflow pipeline looks
    stronger than ever with the Rs150bn Noida real estate construction project
    and ~ Rs63bn of hydel projects where MoA has been signed to be
    recognized in the near future.

    JPA is also pre-qualified to bid for ~Rs85bn of HEP projects


    Valuation
    Valuation
    Valuation
    JP Associates Ltd.,
    JP Associates Ltd.,
    JP Associates Ltd.,
    JPA had signed an agreement with the Uttar Pradesh (UP) government to
    build a 165km 6/8 Lane Access Controlled Expressway connecting
    Noida and Agra (competing with the existing NH2), at an estimated cost
    of Rs60bn over a seven-year period with concession rights for 36 years
    post construction. The government had also agreed to give 6,250 acres
    of land to JPA at five different locations along the expressway, with
    rights to develop it for 99 years at 1/10th the market price develop (at an
    FSI of 1.5) or sell it according to the cash flow requirements of the Taj
    Expressway project. However, the project had been delayed for three
    years on account of the setting up of an enquiry committee.

    The Justice S. Narayan inquiry committee appointed by the erstwhile UP


    Chief Minister (CM) Mulayam Singh Yadav to look into corruption
    charges against current CM Mayawati in the awarding of the 165-km Taj
    Expressway contract cleared the charges against her and
    recommended that the project be implemented right away.
    JP Associates Ltd.,
    Company description
    JPA is a conglomerate with interests in engineering and
    construction (hydel power, river valley & roads), cement,
    hydroelectric build-own- perate-transfer (BOOT) projects, hotels
    and real estate.

    Investment thesis. We rate JPA shares Buy / Low Risk (1L).


    Driven by a strong infrastructure capex tailwind, JPA's
    construction business fundamentals look solid with an order
    backlog of ~Rs115bn. With its status as the leading
    hydroelectric E&C and EPC contractor in the country, JPA looks
    poised to exploit the vast hydroelectric E&C opportunity over the
    next decade. The cement business should provide a growth
    JP Associates Ltd.,

    Our target price is based on a sum-of-the-parts valuation given the


    company's profile: 1) Construction business: Using an FY09E
    EV/EBITDA of 11x at a 30% discount to L&T and BHEL, despite
    higher EBITDA margins, JPA's EBITDA is growing at a much
    slower pace. 2) Existing 7 MMTPA of capacity: Using EV/tonne of
    US$140 3) 2.5 MMTPA UPSCL Plant: Using EV/tonne of US$130
    4) 3 MMTPA HP Plant + 1 MMTPA Panipat grinding unit: Using
    EV/tonne of US$120 5) 1.5 MMTPA Siddhi plant: Using EV/tonne
    of US$120 6) Hydel BOOT projects: We value the Baspa project
    at a 20% holding-company discount to its market value and the
    Vishnuprayag projects at a P/BV of 2.5x and Karcham Wangtoo at
    FY09E BV. 7) Jaypee Greens: DCF using a discount rate of 14%
    8) Jaypee Hotels: At a 20% holding company discount to the
    market value and 9) Taj Expressway Land at Rs285/share.
    JP Associates Ltd.,
    Risks

    We rate JPA shares Low Risk, which differs from the Medium Risk
    assigned by our quantitative risk-rating system that tracks 260-
    day historical share price volatility. This is primarily because
    JPA's E&C order book of Rs115bn+ implies sales coverage of
    6.9x FY07, providing earnings visibility for the medium term.
    Key downside risks to the shares reaching our target price
    include: the construction business is subject to project risks; and
    is sensitive to economic variables; the cement business is
    subject to demand-supply dynamics; further delays in the Taj
    Expressway project; slowdown in India's hydroelectric power
    capex; development and commercial risks in developing and
    selling the land associated with the Taj Expressway project; and
    substantial declines in real estate prices in the northern parts of
    India.
    Disclaimer:
    This report has been prepared solely for information purposes and the
    information contained herein may not be deemed to be an investment advice. Such
    information is impersonal and not tailored to the investment needs of any specific
    person. The information contained herein is not a complete analysis of every
    material fact representing any company, industry or security. The views expressed
    may change. While the information contained herein has been obtained from
    sources believed to be reliable, no responsibility (or liability) is accepted for the
    accuracy of its contents. Investors are advised to satisfy themselves before making
    any investments and should consult with and rely upon their own advisors whether
    and how to use such information in making any investment decision. Neither the
    author nor his firm accepts any liability arising out of use of the above information/
    article. This report is exclusively for the clients of Venkataraman & Co. only.

    VENKATARAMAN & CO.,


    Stock & Share Brokers, New No.2 (Old No.52)
    Dr. Ranga Road, Mylapore, Chennai 600 004.
    Web: www.venkataraman .com E-mail: vnkco@vsnl.com

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