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Indiabulls Real Estate
Strong execution; leasing on an upmove
Result highlights
Strong execution of residential projects
IBREL registered revenues of INR4bn for 3QFY11, up 967% YoY and 33%
QoQ. Net profit increased to INR770m from INR28m in 3QFY10 and INR510m
in 2QFY11. The YoY increase is significant since residential projects had not
begun contributing to revenues in 3QFY10. Even on a QoQ basis, net profit
has grown by 51% on account of better than anticipated execution of
residential projects and better margins. EBITDA margins improved 367bps
QoQ to 30.7% in 3QFY11 from 27.1% in 2QFY11.
Panvel and Gurgaon account for major 3QFY11 sales
A total area of 2.27m sq ft has been sold during 3QFY11 compared to 1.84m
sq ft sold in the previous quarter. However value of area sold was much lower
at INR8.7bn in 3QFY11 vs. INR31.0bn in 2QFY11 on account of change in
sales mix. In 3QFY11, Panvel and Gurgaon projects accounted for over 50%
of the sales while Lower Parel projects contributed majority of the sales in
2QFY11.
Pick-up in commercial leasing
0.25m sq ft was leased in 3QFY11 vs. 0.11m sq ft in 2QFY11. Total area leased
in Jupiter and Elphinstone Mills stood at 1.41m sq ft at the end of 3QFY11.
Further, the second building of 0.55m sq ft in Elphinstone Mills was completed
and has been handed over for fit outs. Out of total office space of 3.3m sq ft,
at Lower Parel, ~2.45m sq ft is now complete.
Demerger of power business
IBREL's board has approved a restructuring scheme, under which the power
business will be demerged to Indiabulls Infrastructure and Power Ltd (IIPL)
and each shareholder of IBREL will get 2.95 shares of IIPL. The scheme is
subject to approval of shareholders, creditors and Delhi High Court.
Valuation and outlook
We reiterate our BUY recommendation with a target price of INR166. The current
market price seems to be factoring in a substantial discount for the real estate
business which is expected to reduce once the power business is demerged.
Land bank update
In 3QFY11, IBREL acquired additional land of ~48acres at Panvel, NCR and
Chennai. It paid INR21.5bn for land acquisition during the quarter, including the
payment for Bharat and Poddar Mills (10.8acres).
During 3Q, ~21acres of land has been moved from land bank to area under
development, resulting an addition of 2.93m sq ft to under development area.
Factoring this and completion of 0.55m sq ft of commercial area, area under
development increased to 59.5m sq ft in 3Q from 57.1m sq ft in the previous
quarter and additional development potential increased to 3,111acres from
3,084acres during the same period.
Indiabulls Power update
Construction is on full swing for Phase I of Amravati and Nasik power projects
(2,700MW).
Financial closure was achieved for Phase II of Nasik with a debt of INR48.87bn.
Transmission licenses were granted by Maharashtra Electricity Regulatory
Commission in 3QFY11 for establishing and operating transmission lines from
Amravati to Akola for Amravati power plant and Sinnar to Babhaleshwar for
Nasik power plant.
Valuation and outlook
We reiterate our BUY recommendation on the stock with a target price of INR166/
share which includes INR50/share for IBREL's stake in IPIT (Indiabulls Properties and
Investment Trust), INR62/share for IBREL's other landbank and INR54/share for stake
in Indiabulls Power.
The current market price appears to be factoring in a substantial discount for the real
estate business and we believe this discount will reduce once the power business is
demerged. Given improved execution, we are increasing our FY11e and FY12e revenue
estimates to INR10.3bn and INR10.4bn and net profit estimate to INR2.7bn and
INR3.9bn, respectively.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Indiabulls Real Estate
Strong execution; leasing on an upmove
Result highlights
Strong execution of residential projects
IBREL registered revenues of INR4bn for 3QFY11, up 967% YoY and 33%
QoQ. Net profit increased to INR770m from INR28m in 3QFY10 and INR510m
in 2QFY11. The YoY increase is significant since residential projects had not
begun contributing to revenues in 3QFY10. Even on a QoQ basis, net profit
has grown by 51% on account of better than anticipated execution of
residential projects and better margins. EBITDA margins improved 367bps
QoQ to 30.7% in 3QFY11 from 27.1% in 2QFY11.
Panvel and Gurgaon account for major 3QFY11 sales
A total area of 2.27m sq ft has been sold during 3QFY11 compared to 1.84m
sq ft sold in the previous quarter. However value of area sold was much lower
at INR8.7bn in 3QFY11 vs. INR31.0bn in 2QFY11 on account of change in
sales mix. In 3QFY11, Panvel and Gurgaon projects accounted for over 50%
of the sales while Lower Parel projects contributed majority of the sales in
2QFY11.
Pick-up in commercial leasing
0.25m sq ft was leased in 3QFY11 vs. 0.11m sq ft in 2QFY11. Total area leased
in Jupiter and Elphinstone Mills stood at 1.41m sq ft at the end of 3QFY11.
Further, the second building of 0.55m sq ft in Elphinstone Mills was completed
and has been handed over for fit outs. Out of total office space of 3.3m sq ft,
at Lower Parel, ~2.45m sq ft is now complete.
Demerger of power business
IBREL's board has approved a restructuring scheme, under which the power
business will be demerged to Indiabulls Infrastructure and Power Ltd (IIPL)
and each shareholder of IBREL will get 2.95 shares of IIPL. The scheme is
subject to approval of shareholders, creditors and Delhi High Court.
Valuation and outlook
We reiterate our BUY recommendation with a target price of INR166. The current
market price seems to be factoring in a substantial discount for the real estate
business which is expected to reduce once the power business is demerged.
Land bank update
In 3QFY11, IBREL acquired additional land of ~48acres at Panvel, NCR and
Chennai. It paid INR21.5bn for land acquisition during the quarter, including the
payment for Bharat and Poddar Mills (10.8acres).
During 3Q, ~21acres of land has been moved from land bank to area under
development, resulting an addition of 2.93m sq ft to under development area.
Factoring this and completion of 0.55m sq ft of commercial area, area under
development increased to 59.5m sq ft in 3Q from 57.1m sq ft in the previous
quarter and additional development potential increased to 3,111acres from
3,084acres during the same period.
Indiabulls Power update
Construction is on full swing for Phase I of Amravati and Nasik power projects
(2,700MW).
Financial closure was achieved for Phase II of Nasik with a debt of INR48.87bn.
Transmission licenses were granted by Maharashtra Electricity Regulatory
Commission in 3QFY11 for establishing and operating transmission lines from
Amravati to Akola for Amravati power plant and Sinnar to Babhaleshwar for
Nasik power plant.
Valuation and outlook
We reiterate our BUY recommendation on the stock with a target price of INR166/
share which includes INR50/share for IBREL's stake in IPIT (Indiabulls Properties and
Investment Trust), INR62/share for IBREL's other landbank and INR54/share for stake
in Indiabulls Power.
The current market price appears to be factoring in a substantial discount for the real
estate business and we believe this discount will reduce once the power business is
demerged. Given improved execution, we are increasing our FY11e and FY12e revenue
estimates to INR10.3bn and INR10.4bn and net profit estimate to INR2.7bn and
INR3.9bn, respectively.
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