On a consolidated basis, JPA had 10000 cr Shareholders fund , 5000 cr minority interest and 65000 cr loan as on March15. This is represented by 73000 cr fixed assets including capital work in progress, and net non-current assets of 7000 cr.
The non-current assets includes about equivalent land for 45 crore Sq.ft. residential area in the books of Jaypee Infra at a valuation of about Rs.30 per square ft. (besides similar low valuation in NCR land assets in the books of JPA and JP sports). I may be wrong, but my sense is if the land price is restated in the balance sheet in market driven valuation, net worth and asset value has to go up by at least 25000 cr. Each.
By next Sept-Oct, assets and debt will reduce by 20000 cr. So the revised numbers will be : 35000 cr Shareholders fund (at restated land value), 5000 cr minority interest , 45000 cr loan -represented by 80000 cr fixed assets including capital work in progress, and net non-current assets of 5000 cr.
Now debt equity ratio looks quite decent, still there is need to reduce it little more, as assets are not generating enough top-line or profit. Present one lakh crore worth of fixed assets in 2014-15 has yielded just 20000 cr turnover and 6000 cr EBITDA. Reasons :
Over 20000 cr assets at JP power are now being commissioned.
EPC business is extremely sluggish in last three fiscal years, but should see huge business growth in next upturn of our economy.
Real estate business is at its worst phase and will take time for recovery too. Toll income in Jamuna Expressway is also not growing well.
Even cement price is now going downwards showing poor demand. Even sale of power is now a bigger problem than managing input coal.
Despite all these, JPA should be able to serve its debts from own cash generation.
This is my understanding, and I am eager to pick holes in my arguments so as to have course correction for my portfolio.
Right now I have allocated 15% fund here. Against net worth of 10000 cr or 35000 cr(as above), market cap is just3000 cr. My purchase price is at 7000 cr.market cap....