Wednesday, November 12, 2014

Jaiprakash Associates Ltd: Result Analysis
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Jaiprakash Associates Ltd, the engineering and infrastructure unit of the debt-laden Jaypee group, on Wednesday reported a net loss of Rs.106.5 crore for the September 2014 quarter, at a time when the promoters are actively seeking to pare debt. The company had posted a profit of Rs.67.67 crore in the corresponding quarter a year ago. 

However, if we look carefully at the results, then we would find that in Q2FY14, the other income component was Rs.123.58 Cr as compared to Rs.45.70 Cr only in Q2FY15. This gives a positive delta of Rs.77.88 Cr, in the previous-year quarter as compared to Q2FY15. Or in other words, this factor was missing in the results of Q2FY15, which is why the loss of Rs.100 plus came so easily. Also, the finance cost increased only by Rs.3.78 Cr in September, 2014 quarter as compared to June, 2014 quarter. 

Revenues however dropped by 15% to Rs.2,664.12 crore in the reporting quarter, due to sequential decline in cement and construction business (on seasonal nature of the business), according to analysts. Finance costs also rose 21% to Rs.793.29 crore compared to a year ago, but very less as compared sequentially. 

The QFY14 results show that the bottomline of the company is along the expected lines according to the average of estimates of analysts polled by CNBC-TV18 (Rs.100 Cr loss) and much better as per analysts polled by NDTV (standalone net loss of Rs.124 crore).

The group is trying to pare its debt of around Rs.60,000 crore by selling assets. On 25 September, the company announced the sale of three hydropower projects run by Jaiprakash Power Ventures to JSW Energy Ltd. Besides, there were recent media reports that, Aditya Birla group firm Ultratech Cement is believed to be looking at possible acquisition of Jaypee Group's three cement plants in Madhya Pradesh in a deal that could be worth about Rs.5,500-6,000 crore.

It is to be noted that the company has an asset base of Rs.36,868.26 Cr, as against its market cap of only Rs.8,039.27 Cr and FY14 earning of Rs.13,327.02 Cr. The book value of the shares of Jaiprakash Associates Ltd (Rs.33.05) is Rs.56.69.

The scrip seems to have factored-in, the current set of fundamentals and hence is not expected to go down too much from Rs.33.05.
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