Buy Jaypee Infratech - Motilal Oswal

The value DNA

Synergistic benefits, FCF visibility, but some gray areas too

- JPIN offers a unique synergistic business model of infrastructure development (Yamuna Expressway) and real estate value unlocking.

- Expect free cash flow (FCF) beginning FY13 itself, given (1) expressway going ex-capex, and (2) strong operating performance in real estate. FCF will be Utilizied for debt repayment and potential growth in payout.

- Value unlocking story is sustainable, though negated by prevailing concerns over (a) traffic growth at expressway, (b) relative weakness in market mix, and (c) risk of policy actions. Some of the concerns are easing off.

- Valuations are inexpensive; Buy with a target price of INR60 (23% upside).

Source : Equity Bulls

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