Under review till further clarity emerges

Transcription

1 [ Result Update Rating matrix Rating : Under Review Target : NA Target Period : NA Potential Upside : NA What s changed? Target EPS FY16E EPS FY17E Rating Under Review NA NA Unchanged Quarterly performance ( crore) Q1FY16 Q1FY15 YoY (%) Q4FY15 QoQ (%) Revenue 2, ,030.4 (21.0) 2,549.4 (6.1) EBITDA (61.0) EBITDA (%) bps bps PAT (465.0) (80.6) (806.7) (42.4) Key financials Net Sales 12, , , ,745.2 EBITDA 3, , , ,024.7 Net Profit 1, (1,110.6) EPS ( ) (4.6) Valuation summary (x) FY12 FY13 FY14 FY15P P/E NM Target P/E NA NA NA NA EV / EBITDA P/BV RoNW (%) NM RoCE (%) Stock data Particular Amount Market Capitalization ( crore) 2,675.6 Total Standalone Debt ( crore) 22,832.0 Cash ( crore) EV ( crore) 24, week H/L ( ) 61 / 9 Equity capital ( crore) Face value ( ) 2 Price performance Return % 1M 3M 6M 12M GMR Infra (3.8) (5.1) (19.4) (47.6) JP Associates 0.4 (36.7) (53.9) (80.3) IRB Infra (0.3) 2.3 Ashoka Buildcon (2.0) August 10, 2015 Jaiprakash Associates (JAIASS) 11 Under review till further clarity emerges Jaiprakash Associates (JAL) reported a 21.0% YoY decline in revenues to crore mainly on account of construction revenues. The construction division revenues plunged 46.5% YoY to crore. The cement division revenues also declined 13.0% YoY to crore. On the other hand, revenues of the real estate segment at crore showed a 99.0% rise as the company amalgamated the Jaypee Sports International Ltd (JSIL-JAL s wholly-owned subsidiary) with itself post the approval of the Allahabad High Court JAL s EBITDA margin declined 12.7 percentage points (pp) to 12.3% as the company s construction and cement EBIT fell sharply during the quarter. While the construction division contracted 25.6 pp to 10.6%, the cement division EBIT margin contracted 8.3 pp to 2.0%. In terms of real estate business, the EBIT margin of the division improved to 28.2% post the amalgamation of its real estate operation with JSIL During the quarter, there were exceptional items associated with the gain of crore on account of sale of a cement grinding unit in Haryana to Shree Cement. Furthermore, there was a loss of 49.1 crore on account of charges levied on termination of agreement on power supply to MP consequent to the commissioning of captive power plant at one of the cement plants. Adjusting for these exceptional items, JAL s net loss works out to crore. Apart from the dismal operational performance, losses widened due to higher interest expenses. Interest expenses came in at crore in Q1FY16 vs crore in Q1FY15 Under review till clarity emerges on asset monetisation, debt reduction JAL reported a net loss of crore on a standalone basis and crore on a consolidated basis. Apart from the dismal performance across all its segments, rising interest expenses are taking a toll on the financial performance given the sharp rise in debt levels. JAL s standalone debt of ~ 22,832 crore and consolidated debt of ~ 61,285 crore (excluding the current portion of the long term debt) as on March, 2015 impacted its financials significantly. Consequently, JAL s stock has corrected ~54% in the last six months and ~80% in the last 12 months. To de-leverage its balance sheet, JAL is making efforts as it has already sold off assets worth ~ 24,000 crore till date. Though JAL is constantly looking to pare its debt through asset monetisation, there have been continuous delays in doing so due to regulatory concerns, consequently, impacting its debt reduction plan. Hence, we are keeping JAL Under Review till the planned asset monetisation fructifies into debt reduction and improvement in earnings. Research Analyst Deepak Purswani, CFA deepak,purswani@icicisecurities.com ICICI Securities Ltd Retail Equity Research

2 Segmental details- Quarterly Exhibit 1: Segmental revenues break-up crore Q1FY16 Q1FY15 Y-o-Y% Q4FY15 QoQ % Cement & cement products Construction Power Hotel/Hospitality Real Estate Investment NM 0.0 NM Others NM 0.0 NM Unallocated Total Less: Intersegment revenues Total Revenues Less: Other Income Net Revenues Exhibit 2: Segmental EBIT break-up crore Q1FY16 Q1FY15 Y-o-Y% Q4FY15 QoQ % Cement & cement products LP Construction Power LP Hotel/Hospitality NM Real Estate Investment NM 10.0 NM Others NM 0.0 NM Less: Unallocable Expenses NM -9.7 LP EBIT NM Exhibit 3: Segmental EBIT margin (%) (%) Q1FY16 Q1FY15 Y-o-Y(bps) Q4FY15 Q-o-Q(bps) Cement & cement products Construction Power Hotel/Hospitality Real Estate EBIT Margin ICICI Securities Ltd Retail Equity Research Page 2

3 [ Company snapshot Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Oct-14 Media reports indicate JAL is in advanced talks to sell its 2.1 MTPA Bhilai Cement unit to Shree Cement for an enterprise value of ~ 1,800 crore Nov-14 Around eight companies show interest in the 960 MW Jangi-Thopan-Powari hydropower project proposed in Kinnaur district of Himachal Pradesh. Among those are the Jaypee Group, which is already trying to sell its two hydropower projects in Kinnaur district Dec-14 JAL sells two cement units and associated power plants in MP for 5400 crore. The deal includes sale of Bela plant (2.1 MT clinker capacity, 2.6 MT grinding unit & captive power plant of 25 MW) & Sidhi Unit (3.1 MT clinker capacity, 2.3 MT grinding unit Mar-15 Jaiprakash Cement wins coal block in Mandla South, Madhya Pradesh, for a bid of 1,852 a tonne. The ready-to-produce block has extractable reserves million tonne and is for the non-power sector. The block was previously owned by MP State Mining Apr-15 Central Electricity Authority (CEA) restricts capacity of Karcham Wangtoo plant to 1,000 MW against 1,200 MW cited by JAL in its rate petition Apr-15 JAL completes sale of cement-grinding unit (1.5 MTPA) to Shree Cement for 358 crore. In August 2014, the board of JAL had approved the sale of the unit May-15 According to media sources, JAL is in talks with UltraTech Cement to sell its 2.2 MTPA cement plant in Bhilai valued at ~ 2,000 crore May-15 JAL once again comes under the radar of the competition watchdog, CCI, for allegedly imposing unfair conditions on buyers of one of its projects in Noida, the Jun-15 According to media sources, JP Associates is in advanced stages of negotiations with Heidelberg Cement to buy the 1 million tonne per annum (MTPA) Sikandarabad cement unit for around Rs 500 crore Jul-15 Credit Analysis & Research Limited (CARE) has downgraded the ratings of JP's Bank Loan Facilities and NCDs. Aug-15 Jaiprakash Associates' deal with JSW Energy to sell its hydro power plants is expected to close within 2 weeks. The 300-MW Bapsa-II hydroelctric plant and the 1091-MW Karcham Wangtoo plant in Himachal Pradesh with a combined capacity of 1391 MW is to be sold for ~ 9700 crore Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) 1 Jaypee Group 31-Mar Orbis Investment Management Ltd. 31-Mar Platinum Investment Management Ltd. 31-Mar Limited 31-Mar LIC Nomura Mutual Fund Asset Management Company Ltd 31-Mar JEL Trust 31-Mar JCL Trust 31-Mar JHL Trust 31-Mar Dimensional Fund Advisors, L.P. 31-May The Vanguard Group, Inc. 30-Jun Source: Reuters, ICICIdirect.com Research Recent Activity (in %) Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Promoter FII DII Others Buys Sells Investor name Value Shares Investor name Value Shares Orbis Investment Management Ltd m 28.75m GMO LLC -5.70m -9.35m Platinum Investment Management Ltd. 8.01m 20.11m APG Asset Management -3.72m -9.33m Nordea Funds Oy 2.14m 5.39m Lyxor Asset Management -3.71m -6.16m BNP Paribas Investment Partners Asia Ltd. 1.92m 4.50m Birla Sun Life Asset Management Company Ltd m -4.43m Tokio Marine Asset Management International Pte. Ltd. 0.83m 2.09m Jupiter Asset Management Ltd m -3.58m Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 3

4 Financial summary Profit and loss statement Crore Net Sales 12, , , ,745.2 Growth (%) Op.Expenditure 9, , , ,720.6 EBITDA 3, , , ,024.7 Growth (%) Other income Depreciation EBIT 3, , , ,452.7 Interest 1, , , ,314.4 PBT 1, ,861.7 Tax Extraordinary item Rep. PAT before MI 1, ,110.6 MI Rep. PAT after MI 1, ,110.6 Adjustment Adj. Net Profit 1, ,353.2 Growth (%) NM Reported EPS ( ) Cash flow statement Crore Net Profit before tax 1, ,619.1 Depreciation & Amortisation Others , ,070.1 Direct tax paid CF before change in WC 1, , , ,775.8 Inc/Dec in Trade Recv Inc/Dec in Inventories Inc/Dec in Loans & Adv ,482.9 Inc/Dec in other current assets -6, , ,121.3 Inc/Dec in cur liabilities , CF from operations -4, , , ,403.4 Purchase of Fixed Assets 2, , , (Inc)/Dec in investments , , CF from investing 1, , , Inc/(Dec) in Debt & interest expenses , , ,314.4 Inc/(Dec) in Net worth 1, ,500.2 CF from Financing 1, , , ,814.2 Net Inc/Dec in cash & eq. -1, ,833.5 Opening cash balance 2, , , Closing cash balance 1, , ,713.3 Balance sheet Crore Liabilities Equity capital Reserves & Surplus 11, , , ,651.0 Shareholder's fund 12, , , , Secured & unsecured debt 21, , , ,163.3 Deferred Tax Liablity 1, , , ,372.7 Sources of funds 34, , , ,673.5 Assets Gross Block less: Acc. Depreciation Net Block Capital WIP Net Fixed Assets Investment Inventories Trade Receivables Cash Loans & Advances Other current assets Total current assets Current Liab. & Prov Net Current Asset Application of funds 34, , , ,673.5 Key ratios FY12 FY13 FY14 FY15P Per share data ( ) EPS Cash EPS BV Revenue per share Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Net Sales PAT Margin Working Capital (ex cash) days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E NM EV / EBITDA EV / Net Sales Price to Book Value Solvency Ratios (x) Debt/EBITDA Debt / Equity Current Ratio Quick Ratio ICICI Securities Ltd Retail Equity Research Page 4

5 ICICIdirect.com coverage universe (Infrastructure) CMP M Cap EPS ( ) P/E (x) EV/EBITDA (x) P/B (x) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E GMR Infra (GMRINF) 14 UR UR 5, NA NA NA JP Associates (JAIASS) 11 UR UR 2, NM NM NM NM NM NM IRB Infra (IRBINF) Hold 9, Ashoka Buildcon (ASHBUI) Buy 3, ICICI Securities Ltd Retail Equity Research Page 5

6 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 6

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