Jaiprakash,
Buy:
Buy/Low Risk 1L
Price (01 Apr 08) Rs230.75 Target price Rs300.00
from Rs462.00
Expected share price return 30.0%
Target price cut to Rs300 — We are cutting our target price to Rs300 from Rs462 to factor in (1) an EV/EBITDA of 12.0x (16.0x previously) for Construction; (2) an EV/ton of US$120 (US$160 earlier) for Cement; (3) Jaypee Power at a 60% discount to P/E valuations as we no longer value projects in the initial planning stages; and (4) a 14% cut in realizations/sq ft for Jaypee Infratech. We maintain our earnings estimates.
Stock looks compelling... — After a 50%-plus correction, the stock is close to our stress-case value of Rs196.
CITI,
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