Buy JP Associates, target of 250: IIFL

By SiliconIndia   |   Tuesday, August 25, 2009
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Bangalore: IIFL has recommended a buy rating on Jaiprakash (JP) Associates with a target price of Rs. 250. The recommendation is based on the company's growth forecast, IIFL believes that the company can be among the top five players in power, cement and real estate in India. According to IIFL, the doubling of cement capacity in three years, launch of 13 million square feet of residential projects in two years and expeditious award of thermal power projects, lend credibility to the group's ambitious expansion plans. Treasury stocks in the parent company and consolidation of all power assets under the listed subsidiary (Jaiprakash Hydropower) provide funding flexibility. With the doubling of cement volumes over financial year 2009-11 (FY09-11) and peak construction at captive projects, IIFL estimates that the company should yield 44 percent earnings Compound Annual Growth Rate (CAGR) over FY09-11, similar to growth rates achieved over FY05-09. JP Associates is engaged in the business of heavy civil engineering construction, expressways, cement and real estate and hospitality. With Monday's closing price of the stock at Rs. 221.80, the percentage of gain would be 12.71 percent with the target price of Rs. 250.
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