>JAI PRAKASH ASSOCIATES LIMITED: EMERGED AS #1 DEVELOPER IN NOIDA REGION

Realty surprise; #1 Developer In NOIDA

■ Visit to Yamuna Expressway – Realty sales to surprise; PO Rs300
We were pleasantly surprised at real estate sales at JP Greens, NOIDA on our visit to Yamuna Expressway & its land-bank. Channel checks indicate that JP has emerged as #1 developer in NOIDA region with booking of ~9mn sq. ft. in 1HFY10, in our view. PO to Rs300 (270) to factor-in hike in valuation of JP Infratech by 40%, re-rating of cement to US$85/tn (75) & hike in value of treasury stock. Infra assets trading at 15% discount to NAV, option value in its power & realty businesses & pipeline of high RoE projects drive our Buy. JPA remains one of our top Infra picks.

■ #1 Developer in NOIDA Region
JP group has emerged as #1 developer in NOIDA region of NCR market, in our view, led by a) low cost landbank (Rs65/sq. ft.) being part of expressway projects, b) rational mid-market pricing (~Rs3K/sq. ft), but with aspirational facilities such as ‘chip-and-putt’ golf course & c) development of community at ‘Wish Town’ . Its new product launches such as AMAN & KOSMOS has made it a leader in respective market segments selling ~4-5mn sq. ft each in 1HFY10. Consequently, JP has sold 14-15mn sq. ft. worth Rs51bn since the launch of Wish Town 2 years back & has received advances worth Rs15bn. We hike value of JP Infratech to0 Rs63/sh (45) on advanced monetization of NOIDA land-bank by 2 years.

■ First 15kms of Yamuna Expressway By Jan’10 - +ve for Realty
Our talks with sub-contractors indicate that JPA aims to complete the first 15kms of the Expressway by Jan’10. This should re-rate the value of its parcel #2 of Yamuna Expressway (not yet in our SOTP) & 650 Ha of landbank of its subs. executing F1 circuit. JP Infratech has spent Rs50bn of Rs97bn capex till 2QFY10. Expect Yamuna expressway with all its structures should open in 2011.

■ Buy value assets 15% discount & 24% EPS CAGR in FY09-11E
Buy JPA as it offers a blend of asset play (15% discount to NAV) & 24% CAGR in parent EPS (FY9-11E). Triggers are a) timely execution of projects (esp. Karcham), b) monetization of realty land bank & c) development of Delhi-Agra region (airport).

To see the full report: JP ASSOCIATES