Sucheta Dalal :Jaypee Infratech goes ballistic with pre-IPO hype
Sucheta Dalal

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Jaypee Infratech goes ballistic with pre-IPO hype  

April 28, 2010

Companies go all out to tout their various planned business ventures just before an initial public offering (IPO). Jaypee Infratech which hits the market on 29 April has gone on a media blitzkrieg.

Here’s a sample of what the group says that it has in the pipeline, according to various media reports. It has been reported that Jaypee Infratech is proposing to bid to develop the Federa airport in Dholera special investment region (SIR) in Gujarat.
There are also reports that the Jaypee group will complete its current Yamuna Expressway project in the year ending 2011, instead of the projected deadline of 2013 while another report talks of Jaypee Group’s plan to invest Rs70,000 crore in the 1,047-km Ganga Expressway within the next five years.

Jaypee Infratech will use approximately Rs3,210.66 crore in the financial year 2010-11 to part-finance its Rs9739.29-crore Yamuna Expressway and integrated township project. The Adani group had backed out of this bid last month.

"Around Rs80 crore worth (of) infrastructure tenders are to be released for the proposed international airport at Federa coming up near Navagam village near Dholera special investment region (SIR). We are interested in entering the bidding,” Manoj Gaur, executive chairman at Jaiprakash Associates Ltd (JAL), a Jaypee group company, was quoted as saying in the Business Standard.

Some of the write-ups that appeared just a few days back in various newspapers include headlines like: ‘Our group’s philosophy is to reward shareholders: Jaypee Group’; ‘Yamuna Expressway to be opened in ’11: Jaypee’; ‘Jaypee Group to bid for Federa airport’s infra projects’).

The sole business of Jaypee Infratech is development of the Yamuna Expressway Project—to operate and maintain it for 36 years.

The company recorded a net profit of Rs266.73 crore and a net loss of Rs11.36 crore in FY09 and FY08 against a total income of Rs556.25 crore and Rs70.66 lakh respectively.

Infrastructure companies like IRB Infrastructure Developers Ltd and IL&FS Transportation Networks Ltd carry a P/E of 163.20 and 169.7 as on 12 April 2010 respectively while Jaypee Infratech’s P/E is 55.36.

The issue opens on 29 April 2010 and closes on 4 May 2010 and plans to raise Rs1,650 crore at a price band of Rs102-Rs117. Incorporated in 2007, Jaypee Infratech is part of the Jaypee Group which was granted concession from YEA (Yamuna Expressway Authority) to develop, operate and maintain the Yamuna Expressway in Uttar Pradesh, connecting Noida and Agra. The concession also provides for the right to develop 25 million square metres of land along the Yamuna Expressway at five locations for residential, commercial, amusement, industrial and institutional purposes.

There are 123 cases filed against Jaypee Group companies including 100 land dispute cases and 936 cases are pending against Jaiprakash Associates Ltd in various courts.

The lead book-running managers are Morgan Stanley, DSP Merrill Lynch, Axis Bank, Enam, ICICI Securities, IDFC Capital, JM Financial, Kotak Mahindra Capital, and SBI Capital.

Rating agencies ICRA and CARE have assigned ‘IPO Grade 3’ to the offer.  — Moneylife Digital Team

-- Sucheta Dalal