A CONSILIUM INFORES & ADVISORS INITIATIVE FOR BALANCE EQUITY BROKING (INDIA) PVT LTD

Transcription

1 16 Agst 2012 Jaypee Infratech Ltd. (JIL) - ` (14/08/12) BUY at Declines BSE SENSEX/S & P NIFTY / Sector Constrction - Real Estate Market Cap./Free Float (` Crs.) /1135 Market Price as on 14/08/12 ` (FV `10/-) 52 Week High/Low ` 65.7/33 Eqity Shares Otstanding (in Crs.) P/E Ratio (Times) (for FY 12) 5.3 P/B (Times) (for FY '12) 1.2 EV/EBITDA (Times) (for FY '12) 6.8 Shareholding Pattern (%) JIL is 83.3% sbsidiary of Jaiprakash Associates Ltd. It was set p in April 2007 as special prpose company to implement the concession from Yamna Expressway Indstrial Development Athority (YEA) to develop Yamna Expressway in UP, connecting Noida & Agra. The concession also provided the right to develop 6175 acres of land along the expressway at five locations for residential, commercial, amsement, indstrial and instittional prposes. JIL s bsiness model consists of earning revenes from traffic and related facilities on the expressway dring the 36 years Concession period and development of associated real estate prsant to the Concession. Share Price Performance Yamna Expressway Yamna Expressway is a 165 km., access controlled, six lane, concrete pavement expressway, along the Yamna river, with the potential to be widened to an eight lane expressway. The expressway will be entirely in the state of Uttar Pradesh. It begins at the existing Noida -Greater Noida Expressway, passes throgh varios proposed SDZs and the proposed Taj International Hb Airport and ends at District Agra. The principal objective is to minimize time throgh ninterrpted movement of passenger & freight traffic & redce congestion on existing highways. Expressway will serve new regional infrastrctre. To provide expressway access to local commters, 13 service roads with total length of 168 kms. have been constrcted concrrently with the expressway. A CONSILIUM INFORES & ADVISORS INITIATIVE FOR BALANCE EQUITY BROKING (INDIA) PVT LTD

2 The Concession follows a Bild Operate Transfer (BOT) model prsant to which JIL has the right to earn toll revene for a period of 36 years following the award of a certificate of completion of the expressway. Company has opened the expressway for traffic on 9th Agst The original estimated cost of ` 9739 Crs. (inclding cost of land for real estate bsiness) has ndergone overrn with now revised estimates of ` 13,300 Crs. This is partially de to change in the scope of the project as per Company sorces. Real Estate Development along the Yamna Expressway JIL has been provided the right to develop 6,175 acres of land which is to be acqired by the YEA and leased to the company for a period of 90 years. This land parcel is frther divided into five land parcels of 1,235 acres each at different locations along the Yamna Expressway. One location is in Noida, two locations in District Gatam Bdh Nagar (part of NCR) and one location each in District Aligarh and District Agra. 55% of the leased land is in the NCR. The average price per acre of land is reported to be ` 26.7 lacs. JIL plans to develop 50% of the land as residential projects, one third as commercial projects and the remaining for instittional se and open space. Ot of five land parcels, Mirzapr (Dist. Gatam Bddha Nagar) & Tappal (Dist. Aligarh) lack commercialization prospects de to their remote locations. The real estate is presently marketed nder the Jaypee Greens brand strong brand owned by JAL - & accessible for marketing JIL s real estate projects. The Company has planned ftre real estate development nder this brand or one or more other brands. While the large size of the land parcels gives JIL, the flexibility for mixed-se development and a competitive advantage, it also implies a long development cycle, since each of the five micro markets will likely have limited real estate demand per annm. Means of financing project cost (inclding real estate land) Means of Financing ` Crs. Eqity from Promoters & Others 1250 IPO proceeds 1500 Debt Accrals from real estate development incl. advances & land sale 4550 Debt 6000 Total Jaypee Infratech Ltd. is also available on

3 Noida land parcel Ot of 1235 acres available to the Company in Noida it has sold/sb leased 349 acres and plans to develop balance 885 acres. The land is sitated at approx. 18 kms. from soth Delhi & 20 kms. from Central Delhi. Company plans to develop 61 million sq. ft. for residential, 10 million sq. ft. for commercial & 7 million sq. ft. for instittional prposes. The development will inclde road network of over 20 kms., 126 MVA of captive power generation and 30,000 klpd capacity of sewerage treatment plants. Real Estate Development rights Location District End Use Total Developable Area (Million sq. ft.) Noida * Gatam Bddha Nagar Residential 61 Commercial 10 Instittional 10 Jaganpr Gatam Bddha Nagar Residential 56 Instittional 19 Mirzapr Gatam Bddha Nagar Residential 56 Instittional 19 Tappal Aligarh Residential 56 Instittional 19 Agra Agra Residential 56 Instittional 19 Total 529 * Company has sold /sb leased 349 acres of land initially and plans to develop remaining 885 acres. Jaypee Infratech Ltd. is also available on

4 Important Highlights Over the period of next 10 to 15 years the Company plans to develop 530 million sq. ft. of land along the entire expressway. As on date, Company has already signed lease deeds and taken possession of 6043 acres (98%) of land. Ot of 530 million sq. ft., 311 million sq. ft. area is in NCR region. Ot of 1235 acres or abot 112 million sq. ft. available in Noida, NCR, Company has sold 28.26% land area ( 349 acres) or development rights of million sq. ft. Therefore, balance ~ 81 million sq. ft. (885 acres) is available for development. Total sales (presmably bild p properties) booked by the Company till date is reported to be million sq. ft. at an average price of ` 3267/sq. ft., aggregating to ` 14,120 Crs. Ot of total sales of ` 14,120 Crs. till date, Company has booked revenes of ` 7130 Crs. from FY 09 to FY 12, which we presme also incldes sale of land contained in Noida parcel. That means that Company has still to collect ` 6990 Crs. These revenes will be booked in the next 2-3 years. In FY 12, Company sold 9.54 million sq. ft. at an aggregate vale of ` 3,891 Crs. and average price of ` 4,081/sq. ft. We estimate that considering real estate market this year, Company might be able to sale not more than 10 million sq. ft. in FY 13, at an average price of ` 4200/sq. ft. aggregating to ` 4200 Crs. If Company collects 20% of this amont as well as 1/3 of amont from old sales (1/3 of ` 6990 Crs.) it can not report revenes of more than ` 3200 Crs. from real estate activity. Since expressway has been declared open on 9/8/12, we expect maximm of ` 200 Crs. revenes from toll. This year Company will have to provide for fll interest on loans as expressway has been commissioned on 9th Agst Proportionate interest for FY 13 may be more than ` 500 Crs. Also, depreciation will be mch higher as the expressway has been commissioned. Company is therefore expected to report mch lower net profit in FY 13 as compared to ` 1290 Crs. in FY 12. Rling land prices near Greater Noida, where grop company has formla one track, are reported to be rling between ` /sq. ft. With the expressway becoming operational, sale of real estate will gather momentm. Year End (` Crs.) Total properties sold (Million Sq. Ft.) Property & land sale details FY '09 FY '10 FY '11 FY '12 Total till date Total Sales Vale Pre sales Advances Sale of Developed plots Sale of Bild p properties Sales booked by Company Average Realisation/Sq. Ft. (`) Total sales booked, area sold and revenes till March 12 Details ` Crs. Million sq. ft. Total sales booked till March 12 14, Total Revenes booked till March Balance revenes to be booked ot of total sales 6990 Sale of own development in FY Fresh sales expected in FY 13 from Real Estate Expected revene booking in FY 13 (20% of fresh sales and 1/3 of old sales to be booked as revenes) 3170 Jaypee Infratech Ltd. is also available on

5 Comments Expressway is expected to redce travel time from Delhi to Agra from 4 hors to 2 hors. Promoters will be reqired to pare down their holding from 83.3% to 75% by Jne 13. We believe that stock price will slowly come down to reflect mch lower profits in FY 13, if market conditions remain the same. Ftre price trend will depend on conditions in real estate market as well as development taking place near varios land parcels held by the Company. Company s projects are expected to face competition from grop companies projects Jaiprakash Associates & Jaypee Sports International. The revenes booked will also depend on how mch direct land sales is ndertaken by the Company in varios land parcels. Depreciation charged and other expenses of the Company will be covered by toll revenes. Interest cost will redce depending on the debt repayment ndertaken by the Company from real estate division revenes. Jaypee Infratech Ltd. is also available on

6 Financials Period Ended (` Crs.) FY '10 FY '11 Jne '11 Sept. ''11 Dec. '11 March '12 FY '12 Jne '12 Total Income Cost of Sales Personnel Expenses Other Expenditre Total Expenditre EBITDA EBITDA Margin(%) Depreciation Interest Taxation Other Income Net Profit Net Profit Margin (%) Eqity Capital (FV ` 10/-) Eqity Shares (in Crs.) Reserves EPS (`) Book Vale (`) ROE (%) Note: Interest on debt has been debited to capital work in progress or project nder development. Jaypee Infratech Ltd. is also available on

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