Jaiprakash Associates (JPA)’s Q42009 pre-exceptional net profit of Rs 2.85 billion, up 35.2% yoy is sharply ahead of our expectation primarily because of higher than expected revenue of construction and realty division and second interim dividend from its power subsidiary JPVL. The topline for the quarter stood at Rs 19.85 billion a growth of 55% yoy, driven by 124% growth in revenues of construction division (Rs 10.64 billion) and 22% growth in revenues of cement division (Rs 7.25 billion). Growth in construction revenues was driven by strong execution in key projects like Yamuna expressway road construction, Karachamwangtoo HPP, and Srisailam Canal project.
The revenues grew by 62.9% year on year (yoy) to Rs 2,085 crore during Q4FY2009 as the revenues from the construction business zoomed by 145.1% to Rs 1,164 crore. Though the results are encouraging and the growth guidance is quite aggressive, we believe that high leverage and a possible equity dilution could continue to act as a drag on the valuations.
The stock has potential enough to be a valuable part of one’s portfolio
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