Noida Airport Delay – JP Associates impacted

The indefinite delay in taking off of Greater Noida International Airport has impacted the Land Bank of JP Associates and its Yamuna Expressway project. JP Associates has around 3750 acres of land bank along the Yamuna Expressway around the proposed airport. Adding to JP Associates’ woes is the weakening property prics in the NCR region. Merill has thus taken off the value of land bank in sum of parts valuation of JP Associates.

Merill has also factored-in higher cost of expressway Rs74bn (Rs66bn) on higher land / construction costs and lowered realization assumptions on NOIDA land bank till FY11E on continued weakness in NCR realty markets. JP Associates is expected to maintain an EPS of Rs 6.81 and Rs 9.29 for FY09 and FY10.

INR Sum of the Parts Valuation of JP Associates:
EPC – 82
Jaypee Infratech – NOIDA land on development & Agra parcel on land sale – 52
Jaypee Greens 10
Coal Mines – 18
Power Business – 112
Cement – 74
Hotels – 4
Steel – 2
Debt – (32)
Based on the above, Merill has set a target of Rs 325 on the stock downgrading it from Rs 395.

Taking the current scenario into account, we believe JP Associates is valued at a premium to its peers [EPS, Realty and Power].