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Jaiprakash Associates - Cement & Contruction Play

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=410
Printed Date: 20/Apr/2025 at 8:10am


Topic: Jaiprakash Associates - Cement & Contruction Play
Posted By: nav_1996
Subject: Jaiprakash Associates - Cement & Contruction Play
Date Posted: 25/Sep/2006 at 11:28pm
Has some one done any analysis on JP Associates. It looks an interesting stock as it is one of the largest cement players in North India and builds hydroelectric project BOT basis. It also has exposure to Hotels through its subsidary.


Replies:
Posted By: India_Bull
Date Posted: 06/Nov/2006 at 9:38pm
I am holding few shares of this , dont know why it has run up so fast in last few days? Any news ?

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Posted By: basant
Date Posted: 06/Nov/2006 at 10:03pm
The company has been awarded the Taj expressway contract - connecting Delhi to Agra. That is the reason for the run up. makes sense to hold since targetrs floating by leading brokerages is well over Rs 1000.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: manishdave
Date Posted: 06/Nov/2006 at 10:26pm
Company has three divisions:
Construction, Cement, Power.
 
Construction story is know and in cement they are expanding aggressively. Hotel business is insignificant for JP.
 
Power business is intresting. They are identifying hydro power locations and building their palnts. Company holds 65% in JP hydro and has 300MW capacity. Another one is 400mw and should be up and running by now. THe biggest one is 1000MW and should be up and running by 2009 so there is growth.
Beauty of hydro is major investment is done only once. After that it is just cash flowing with water.
Life of dam is generally 500-1000 years and power is not going out of fashion. Regulation is problem for power sector but we are already in mess so It wont get worse.
 
They should also get Carbon Credit benifit.

Posted By: tyler_durden
Date Posted: 06/Nov/2006 at 10:46am
jp hydro is coming up with some other projects in bhutan too. my friend's father is vp with jp hydro and i got to know about it from him.

won't these projects in the longer run help in growth of jp hydro?

Posted By: basant
Date Posted: 06/Nov/2006 at 10:52am
Manish : Just curious to know this. Hydro projects have long gestation so while the cash flow is positive after it starts to operate is it to be valued differently then general projects - growth can come only by capex; since these cos cannot increase prices and also there is only so much that we can generate through a single facility.So would it not always command low PE?
 
Read that China has a lot of hydro electric plants. ANy co. that you are aware of globally where investors have made money through this particular business model or is this just a 12- 15% stable compounder.


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Posted By: nikhil090
Date Posted: 06/Nov/2006 at 11:04am
The biggest advantage of hydro power projects is that the cost or RM is virtually nil. The biggest expense is in constructing the projects which involves lot of issues (replacement of people, political issues,biodiversity etc), long gestation period etc but once completed these can be actually very good money spinners.

Posted By: manishdave
Date Posted: 07/Nov/2006 at 1:08am
Basant,
Most big hydro projects are owned by govts. And it is just there no growth. So you buy them at point when value is already created. Many times it comes with distribution too. But I will put my logic here for JP.
 
On capex and On Growth:
JP Hydro has equity of 491 Cr. Should post EPS of 3.5-4. So that is decent ROI with stability of business. Now if you buy at same at Rs.32/share it is not impressive.
 
JP sold 35% of equity at 30 so they got their money back. They will have another plant ready soon with same money. They sell 35% again if they want in new company.
 
Their ROI on base equity is good coz they can get high debt/equity and in this kind of business I dont see that as risk.

Posted By: kg
Date Posted: 26/Apr/2007 at 3:20pm
Any current updates on this stock ..i hold some shares hence need the advise . thanks a ton

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