JP Associates Ltd.,

Technical Outlook Buying level : 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.

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 Rs 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 JP Associates Ltd.,

Valuation

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. JP Associates Ltd.,

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 Web: