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[Lavanay]

Jaiprakash Associates is an evolving infrastructure asset play that has gathered substantial momentum over the past 3 years through 4 engines of growth: (1) real estate; (2) cement; (3) engineering and construction; and (4) power projects, working in tandem.

Over years JPA has won key projects that have multiple value drivers. An example of this would be the Taj Expressway project, which creates value on three fronts: (1) real estate; (2) construction; and (3) BOT project. A recent case in point is the F1 track project, which could be another big value creator. As a result we maintain our Buy/Low Risk rating on the stock with a target price of Rs462.

Many broking houses have given a buy call on this stock.

Report card
PE ratio   103.96   19/12/07
EPS (Rs)   3.79   Mar, 07
Sales (Rs crore)   862.00   Sep, 07
Face Value (Rs)   2   
Net profit margin (%)   11.61   Mar, 07
Last dividend (%)   15   10/07/07
Return on average equity   16.18   Mar, 07

[dudette]

Jaiprakash Associates-

-A Catch 22 situation-Jaypee Infratech does not have sufficient funds to carry out the Taj Expressway, hence infusion from parent.
 
-Diversion of funds from parent company to reduce Return on Equity for JP Associates.
 
-Returns from Jaypee Infratech are away atleast 3-4 years.
 
-Even after such massive infusion, Jaypee Infratech may have to substantially dilute Equity to raise Equity and Debt for funding the Rs 6400 crore Taj Expressway.
 
-To Retain subsidiary structure JP Associates may need to pump in more funds into JP Infratech at a later stage.