Jaypee Infratech: Real estate business, commissioning of expressway lead to robust growth

MUMBAI: Robust realization from its real estate business and commissioning of its expressway led Jaypee Infratech to post a robust result for the September 2012 quarter. Despite higher interest outgo on account of commencement of the expressway, its net profit margin was 25% which is healthy in its line of business.

Yamuna Expressway is the sole project being developed by Jaypee Infratech. The project consists of construction and tolling for 36 years of six-lane 165 km road connecting Noida to Agra. In addition, the company has the right to develop 6,175 acres of land, which is spread over five regions along the highway. Out of the five land parcels, two of them are located in the National Capital Region.

In august this year, the company commissioned its expressway. As a result, the company's cash flow would now improve, which will allow it to reduce debt in the coming quarters. In September 2012 quarter, the company sold 3 million square feet of real estate at an average price of nearly Rs 4,000 per square feet (psf). This was nearly 10% higher than the average selling price of Rs 3,724 psf in the June 2012 quarter.

Over the last three months, Jaypee Infratech has underperformed the broader ET Construction index. The stock of Jaypee Infratech has fallen by 3% in the last three months while ET construction index grew by 8% in the same period.