Author: CP

JK Paper reported Q3FY08 results. Net revenues increased by 17.8% YoY / 7.1% QoQ to Rs 2.2 bn. EBITDA margins declined sharply by 530 bps YoY / 240 bps to 15.2%, as against consensus expectations of 18%.

Increase in raw material by 54.9% YoY and 60.2%YoY increase in power and fuel cost put pressure on margins. Raw material as percentage of sales for the quarter was 27.1% (20.6% previous year) and power and fuel was 10.7% (7.9% previous year). As a result, EBITDA was down by 12.4%YoY / -7.6% QoQ to Rs 336 mn (we expected Rs 383 mn). Higher other income of Rs 52 mn as against mere Rs 2 mn previous year supported financials. Commissioning of new packaging plant led to increase in depreciation and interest charge. Depreciation increased by 35.7% YoY to Rs 170 mn while interest increased by 83.8% to Rs 143 mn. As a result PBT declined by 58.3% to Rs 76 mn.

Company on fully diluted basis reported EPS of Rs 2.0 as against Rs 1.5 previous year.

GMR Infrastructure has acquired 50% stake in Intergen, a power utility with assets in UK, Mexico, Netherlands, Australia and Phillipines, for US$1.1 B. Intergen has an operating capacity of 7,658MW, while its attributable capacity is 6200MW. 85% of Intergen’s capacity is natural gas based, while the rest is coal-based. GMRI has purchased the stake from AIG, while Ontario Teachers’ Fund holds the balance 50%.

Intergen clocked revenue of US$1.6B, EBITDA of US$613M, PAT of US$105M, FCF of US$330M and distributed US$140M dividend in 2007. It appears highly leveraged with gross debt of US$4.3B as against equity of US$600M, but we believe this is not unusual amongst utilities, as it is within the prescribed DSCR of 1.4.

GMR’s Modus Operandi behind Intergen Investment:
GMR has funded its US$1.1B investment via domestic bridge loans at 10.5%. Interest payment should negate US$50 mn of GMR’s estimated share of Intergen’s profits (based on 2007 data). Intergen’s generous dividend payout will go towards debt servicing at least through 2010, in our estimate. Refinancing the loan via forex loans and equity injection would enhance contribution at the net level.

Parsvnath Developers Ltd – PDL reported F4Q08 consol results – sales up 25.5% to Rs5 bn, OPM compressed by 190 bps to 32.8%, which together resulted in 19% fall in net profits to Rs1.07 bn. Full year profits for F08 were Rs4.2 bn (up 45%), versus our estimate of Rs4.4 bn, 5% below consensus estimates.

PDL’s net debt has risen to Rs14 bn (74% net gearing) versus Rs12.8 bn (71%) in F3Q08. Receivables continue to rise – Rs12.8 bn (Rs10.8 bn in F3Q08) – implying incrementally 37% of sales (43% previous qtr).

Land bank is 211 msf (210 msf in F3Q08), area under construction moves up to 77 msf (75.8 msf in F3Q08) and pre-sales moves up to 40 msf (32.8 msf earlier). Ongoing projects include 24 msf of plotted development. The company grossed Rs50 mn in rental income in F08, which it expects to rise to Rs250-300 mn in F09.