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Thursday, May 11, 2006 &

S.No.   Scrips                  Code    Rate    Target
1.      WPIL Ltd.               505872  33.55   42.00
2.      Valiant Communications  526775  47.00   59.00
3.      Linc Pen & Plastics     531241  47.60   60.00
4.      Ricoh India Ltd.        517496  49.70   63.00
5.      Apcotex Industries      523694  54.95   69.00

S.No.   Scrips                         Code     Rate    Target
1.      Rishabh Digha Steel     531539   16.10   21.00
2.      Oil Country Tubular     500313  17.00   22.00
3.      Sunflag Iron & Steel    500404  18.45   24.00
4.      Conart Engineers        522231  27.45   35.00
5.      Reliance Capital Vent   532703   28.80   36.00

Mahindra Financial - SSKI

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Motilal Oswal - Prathiba Industries

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IDFC Equitymaster

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Sharekhan Investor's Eye

Jaiprakash Associates
Cluster: Ugly Duckling
Recommendation: Buy 
Price target: Rs650
Current market price: Rs544

No change in view

Result highlights

  • At Rs70 crore the Q4FY2006 net profit (stand-alone) of Jaiprakash Associates Ltd (JAL) is less than our expectation of Rs81 crore net profit. The net profit is lower than expected primarily due to a drop in the margins of the construction division. 
  • The cement revenues grew strongly by 23% year on year (yoy) to Rs413 crore, driven by a volume growth of 17% during the quarter. The earnings before interest and tax (EBIT) margin of the cement division improved by 740 basis points to 18.4% during the quarter, driven by a 5% improvement in the cement realisations. Consequently the earnings before interest, depreciation, tax and amortisation (EBIDTA) per tonne for the cement division surged by 31% to Rs545. 
  • In Q4FY2006 the margins of the construction division fell by 920 basis points to 19.5% as it executed lower-margin orders during the quarter. 
  • With the drop in the margins of the construction business, the overall operating profit margin (OPM) of JAL dipped by 556 basis points to 18%. As a result the operating profit for the quarter declined by 9% to Rs154 crore. 
  • During the quarter the other income of the company grew by 20% on account of the funds recently mobilised by the company through a 165-million-euro foreign currency convertible bond (FCCB) issue. As a result, the pre-exceptional net profit for the quarter grew by 21%. The reported net jumped by 150%, as last year there was an extraordinary expense because of a one-time guarantee money paid to raise non-convertible debentures (NCDs) and term loans.