JP Associates Ltd.

,
Technical Outlook

Buying level :1380-1500.

Medium Term Target : 2000
Long term target : 2400

We Initiate Buy on current levels .

The scrip has formed a inverted head &

Shoulder on weekly chart and is taking
A strong support from neckline brake out.
We initiate to accumulate in every dip and will
Attain the targets respectively.
 JP Associates Ltd.,
Potential upside from Taj Expressway — Even though the entire Taj
Expressway related land parcels could be worth Rs478, we think it is
prudent to only include Rs285 for the two Noida parcels. We could
consider including the remaining parcels when we get closer to the
allocation dates or in case of a government notification to this effect. This
could imply a further upside of Rs194. 24.1 MMTPA of cement by FY11E
— We expect JPA to have cement capacity of 24.1 MMTPA by FY11E,
making it one of the largest cement players in India.

FY08E is likely to be the year of peak realizations and EBITDA margins in line
with our view on the cement industry. JPA’s rapidly expanding capacity
should provide support to cement numbers when oversupply hits the
markets.
Strong E&C order pipeline — JPA’s E&C division ended FY07 with an order
backlog of Rs115bn (6.9x FY07 sales). Order inflow pipeline looks
stronger than ever with the Rs150bn Noida real estate construction project
and ~ Rs63bn of hydel projects where MoA has been signed to be
recognized in the near future.

JPA is also pre-qualified to bid for ~Rs85bn of HEP projects

Valuation
Valuation
Valuation
JP Associates Ltd.,
JP Associates Ltd.,
 JP Associates Ltd.,
JPA had signed an agreement with the Uttar Pradesh (UP) government to
build a 165km 6/8 Lane Access Controlled Expressway connecting
Noida and Agra (competing with the existing NH2), at an estimated cost
of Rs60bn over a seven-year period with concession rights for 36 years
post construction. The government had also agreed to give 6,250 acres
of land to JPA at five different locations along the expressway, with
rights to develop it for 99 years at 1/10th the market price develop (at an
FSI of 1.5) or sell it according to the cash flow requirements of the Taj
Expressway project. However, the project had been delayed for three
years on account of the setting up of an enquiry committee.

The Justice S. Narayan inquiry committee appointed by the erstwhile UP

Chief Minister (CM) Mulayam Singh Yadav to look into corruption
charges against current CM Mayawati in the awarding of the 165-km Taj
Expressway contract cleared the charges against her and
recommended that the project be implemented right away.
 JP Associates Ltd.,
Company description
JPA is a conglomerate with interests in engineering and
construction (hydel power, river valley & roads), cement,
hydroelectric build-own- perate-transfer (BOOT) projects, hotels
and real estate.

Investment thesis. We rate JPA shares Buy / Low Risk (1L).

Driven by a strong infrastructure capex tailwind, JPA's
construction business fundamentals look solid with an order
backlog of ~Rs115bn. With its status as the leading
hydroelectric E&C and EPC contractor in the country, JPA looks
poised to exploit the vast hydroelectric E&C opportunity over the
next decade. The cement business should provide a growth
 JP Associates Ltd.,

Our target price is based on a sum-of-the-parts valuation given the

company's profile: 1) Construction business: Using an FY09E
EV/EBITDA of 11x at a 30% discount to L&T and BHEL, despite
higher EBITDA margins, JPA's EBITDA is growing at a much
slower pace. 2) Existing 7 MMTPA of capacity: Using EV/tonne of
US$140 3) 2.5 MMTPA UPSCL Plant: Using EV/tonne of US$130
4) 3 MMTPA HP Plant + 1 MMTPA Panipat grinding unit: Using
EV/tonne of US$120 5) 1.5 MMTPA Siddhi plant: Using EV/tonne
of US$120 6) Hydel BOOT projects: We value the Baspa project
at a 20% holding-company discount to its market value and the
Vishnuprayag projects at a P/BV of 2.5x and Karcham Wangtoo at
FY09E BV. 7) Jaypee Greens: DCF using a discount rate of 14%
8) Jaypee Hotels: At a 20% holding company discount to the
market value and 9) Taj Expressway Land at Rs285/share.
 JP Associates Ltd.,
Risks

We rate JPA shares Low Risk, which differs from the Medium Risk
assigned by our quantitative risk-rating system that tracks 260-
day historical share price volatility. This is primarily because
JPA's E&C order book of Rs115bn+ implies sales coverage of
6.9x FY07, providing earnings visibility for the medium term.
Key downside risks to the shares reaching our target price
include: the construction business is subject to project risks; and
is sensitive to economic variables; the cement business is
subject to demand-supply dynamics; further delays in the Taj
Expressway project; slowdown in India's hydroelectric power
capex; development and commercial risks in developing and
selling the land associated with the Taj Expressway project; and
substantial declines in real estate prices in the northern parts of
India.
Disclaimer:
This report has been prepared solely for information purposes and the
information contained herein may not be deemed to be an investment advice. Such
information is impersonal and not tailored to the investment needs of any specific
person. The information contained herein is not a complete analysis of every
material fact representing any company, industry or security. The views expressed
may change. While the information contained herein has been obtained from
sources believed to be reliable, no responsibility (or liability) is accepted for the
accuracy of its contents. Investors are advised to satisfy themselves before making
any investments and should consult with and rely upon their own advisors whether
and how to use such information in making any investment decision. Neither the
author nor his firm accepts any liability arising out of use of the above information/
article. This report is exclusively for the clients of Venkataraman & Co. only.

VENKATARAMAN & CO.,

Stock & Share Brokers, New No.2 (Old No.52)
Dr. Ranga Road, Mylapore, Chennai 600 004.
Web: www.venkataraman .com E-mail: vnkco@vsnl.com