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Ansal Properties and Infrastructure Limited
Disappointing 2Q, Maintain
Underperform
2Q below expectation, Maintain Underperform
APIL reported net profit of Rs199mn, fall of 46% from 1Q due to sharp reduction
in EBIDTA margin from 28% to 19%. We reiterate our underperform rating with a
slightly adjusted PO of Rsx62, implying 29% downside as it continues to battle
with high leverage while we estimate that the operational cash surplus will be
insufficient to meet its debt obligations of over Rs5bn for next 12 -18 months.
Also, we have adjusted our EPS lower to account for recent dilution though QIP.
Debt continues to pile up
The leverage continues to be high (~0.85x adjusting for recent QIP) even after
APIL has raised Rs3.8n by diluting more than 30% in last 12 months. APIL is
expected to utilize only 50% of the proceeds for debt repayment while remaining
was utilized for working capital. We believe the current debt levels at Rs15bn
(adjusted for QIP) are unsustainable though positively the recent QIP proceeds
will help APIL to repay high cost (borrowed at over 20% interest) debt.
Operating cash flows unexciting
APIL currently has 24mn sq ft of pre sold projects which it is planning to deliver
over next 2-3 years. It expects to receive Rs21bn from these projects against
expenses of ~Rs15bn. We estimate the surplus from these projects will be good
to cover just its interest expenses over next 2 years.
Gurgaon project could be positive
APIL is looking to add a new project in Gurgaon- Golden Greens with total
development potential of 6.5mn sq ft of which 4.5mn sq ft would be residential.
APIL would have to share 25% of the revenue with the land owner. The project
could potentially add 10% to the gross NAV as per our estimate.
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