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Potential upside from Taj Expressway Even though the entire TajExpressway related land parcels could be worth Rs478, we think it isprudent to only include Rs285 for the two Noida parcels. We couldconsider including the remaining parcels when we get closer to theallocation dates or in case of a government notification to this effect.

This could imply a furtherupside of Rs194. 24.1 MMTPA of cement byFY11E We expect JPA to have cement capacity of 24.1 MMTPA byFY11E, making it one of the largest cement players in India.

FY08E is likely to be the year of peak realizations and EBITDA margins inline with our view on the cement industry. JPAs rapidly expandingcapacity should provide support to cement numbers when oversupplyhits the markets.

Strong E&C order pipeline JPAs E&C division ended FY07 with anorder backlog of Rs115bn (6.9x FY07 sales). Order inflow pipeline looksstronger than ever with the Rs150bn Noida real estate constructionproject and ~ Rs63bn of hydel projects where MoA has been signed tobe recognized in the near future.

JPA is also pre-qualified to bid for ~Rs85bn of HEP projects

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Valuation

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Valuation

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Valuation

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JPA had signed an agreement with the Uttar Pradesh (UP) government tobuild a 165km 6/8 Lane Access Controlled Expressway connectingNoida and Agra (competing with the existing NH2), at an estimated costof Rs60bn over a seven-year period with concession rights for 36 yearspost construction. The government had also agreed to give 6,250 acresof 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 (atan FSI of 1.5) or sell it according to the cash flow requirements of theTaj Expressway project. However, the project had been delayed forthree years on account of the setting up of an enquiry committee.

The Justice S. Narayan inquiry committee appointed by the erstwhile UPChief Minister (CM) Mulayam Singh Yadav to look into corruptioncharges against current CM Mayawati in the awarding of the 165-km

Taj Expressway contract cleared the charges against her andrecommended that the project be implemented right away.

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Company description

JPA is a conglomerate with interests in engineering andconstruction (hydel power, river valley & roads), cement,hydroelectric build-own- perate-transfer (BOOT) projects, hotelsand real estate.

Investment thesis. We rate JPA shares Buy / Low Risk (1L).Driven by a strong infrastructure capex tailwind, JPA'sconstruction business fundamentals look solid with an orderbacklog of ~Rs115bn. With its status as the leading

hydroelectric E&C and EPC contractor in the country, JPA lookspoised to exploit the vast hydroelectric E&C opportunity overthe next decade. The cement business should provide a growth

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Our target price is based on a sum-of-the-parts valuation given thecompany's profile: 1) Construction business: Using an FY09E

EV/EBITDA of 11x at a 30% discount to L&T and BHEL, despitehigher EBITDA margins, JPA's EBITDA is growing at a muchslower pace. 2) Existing 7 MMTPA of capacity: Using EV/tonne ofUS$140 3) 2.5 MMTPA UPSCL Plant: Using EV/tonne of US$1304) 3 MMTPA HP Plant + 1 MMTPA Panipat grinding unit: UsingEV/tonne of US$120 5) 1.5 MMTPA Siddhi plant: Using EV/tonneof US$120 6) Hydel BOOT projects: We value the Baspa projectat a 20% holding-company discount to its market value and the

Vishnuprayag projects at a P/BV of 2.5x and Karcham Wangtoo atFY09E BV. 7) Jaypee Greens: DCF using a discount rate of 14%8) Jaypee Hotels: At a 20% holding company discount to themarket value and 9) Taj Expressway Land at Rs285/share.

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Risks

We rate JPA shares Low Risk, which differs from the Medium Riskassigned by our quantitative risk-rating system that tracks 260-

day historical share price volatility. This is primarily becauseJPA's E&C order book of Rs115bn+ implies sales coverage of6.9x FY07, providing earnings visibility for the medium term.Key downside risks to the shares reaching our target priceinclude: the construction business is subject to project risks;and is sensitive to economic variables; the cement business issubject to demand-supply dynamics; further delays in the TajExpressway project; slowdown in India's hydroelectric powercapex; development and commercial risks in developing andselling the land associated with the Taj Expressway project; andsubstantial declines in real estate prices in the northern parts ofIndia.

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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 specificperson. 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 theauthor 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 600 004.

Web: www.venkataraman .com E-mail: vnkco@vsnl.com