JAIPRAKASH ASSOCIATES
Reco price/date: Rs 96/October 23;
Current/Target price: 95/NA
Jaiprakash Associates (JPA) is set to benefit from the boost to the overall economy and infrastructure, growth in cement demand, higher capacity utilisation and likely reduction in interest rates. Free-cash flow expected to turn positive in FY14 for first time in last 10 years. Based on a fairly conservative valuation, the value of the stock stands at Rs 134 indicating significant upside from current levels. The likely decline in interest rates in the coming quarters will have a direct positive impact on the earnings of infra companies, including JPA. A reduction of 200 basis points in the interest rates is likely to provide a further upside of Rs 0.68 to analysts’ EPS estimates for FY14. Upgrade to outperform from underperform.
First Global India Research
ADANI POWER
Reco price/date: Rs 48/October 22;
Current/Target price: Rs 48/Rs 47
Adani Power’s (APL) Q2FY13 standalone adjusted loss of Rs 340 crore came in higher than Edelweiss’ estimate of Rs 210 crore loss as use of high cost imported coal continued due to the First-In-First-Out accounting policy and lower than expected Bunyu and CIL volumes. Subdued plant load factor on evacuation constraints also impacted generation during the quarter. While management remains confident of improving domestic fuel supplies for pipeline projects, challenges in the near term persist. APL is trading at 1.9 times and 1.6 times revised FY13 and FY14 book value estimates, respectively. Maintain ‘REDUCE’
Edelweiss Securities