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India Property:: 3Q results review - Who won who lost? Numbers in brief
• 3Q results– Mumbai developers outperform; while Bangalore/NCR
players deliver mixed set of results - 3Q results were fairly decent for
the Indian property sector with the exception of Unitech/Prestige (30-
40% miss). Mumbai-based developers (IBREL/OBER/HDIL) were clear
outperformers beating expectations by 15-30%. While DLF missed the
consensus PAT estimates, operational results were largely in line. 3Q
earnings for Bangalore developers were however mixed (Sobha– in line;
Brigade- positive, Prestige–below expectations).
• Margins remain steady despite cost inflation concerns– EBITDA
margins improved across almost all companies (+0-8% Q/Q) aided by
(a) better pricing especially in Mumbai/NCR over the last two years, and
(b) reduced contribution from past projects (where margins were lower).
• Sales bookings were largely stable Q/Q for NCR (DLF/UT) and
Bangalore developers. Among Mumbai developers, HDIL was a clear
outperformer in terms of sales bookings in Dec-Q, thanks to the
successful launch of its Palghar project (~4msf/Rs7.6B pre sales since
launch), while others have seen pre-sales coming off Q/Q due to lack of
new launches. Approval delays were highlighted as a key challenge by
all almost companies thereby adversely impacting the new launch plans.
• Debt reduction plans taking a back seat with Unitech being the only
company in our coverage universe to report a meaningful reduction in
net debt in Dec-Q. Debt for almost all other listed players remained
stable or even increased marginally. More importantly, management
commentary on debt reduction seems to be toning down across
companies as cash flows are now selectively being used to buy land.
• Refinance concerns however seem to be overdone given less than
Rs10B debt repayments due in Mar-Q in the listed space as against the
media reports of a much higher estimate of Rs150B across all developers
(listed/unlisted). While FY12 debt repayments for companies in our
coverage universe stand at ~Rs60B, most companies indicated that they
have debt facilities in place to refinance the same. Average cost of debt
though has increased by 50-100bps across the board.
3QFY11 results review
3Q results were fairly decent for the Indian property sector with the exception of
Unitech/Prestige (30-40% earnings miss). While DLF missed the consensus PAT
estimates (on account of high minority interest), operational results were largely in
line. Mumbai-based developers (Indiabulls, Oberoi and HDIL) delivered strong set of
numbers beating the street and our estimates by 15-30%; results for Bangalore based
developers were rather mixed (Sobha – in line; Brigade – positive; Prestige,
Puravankara –below expectations).
Margins remained steady (+0-8% Q/Q) across almost all companies despite cost
inflation concerns. This is primarily attributable to (a) better pricing especially in
Mumbai/NCR over the last two years; (b) reduced contribution from past projects
(where margins were lower).
Bookings run rate stable Q/Q
Sales booking remained largely stable Q/Q for NCR developers (UT/DLF) and
Bangalore developers with the exception of Prestige. Prestige’s 2Q bookings were
boosted by launch of Kingfisher towers (pre sold 0.2msf Rs20Kpsf); adjusted for this
the bookings were stable Q/Q.
Among the Mumbai-based developers, HDIL was the key outperformer in terms of
sales bookings in Dec-Q thanks to successful launch of its Palghar project (4msf sold
since launch). However, sales booking for Oberoi and IBREL have come off due to
lack of new launches in 3Q. IBREL 2Q bookings were boosted by 10:90 scheme in
Lower Parel.
Approval delays were highlighted as a key challenge by all companies thereby
adversely impacting the new launch plans. However, most companies expect the
launches to gain momentum in FY12 (with approvals being in advanced stages) and
have outlined an aggressive launch plan for next one year.Bookings run rate stable Q/Q
Sales booking remained largely stable Q/Q for NCR developers (UT/DLF) and
Bangalore developers with the exception of Prestige. Prestige’s 2Q bookings were
boosted by launch of Kingfisher towers (pre sold 0.2msf Rs20Kpsf); adjusted for this
the bookings were stable Q/Q.
Among the Mumbai-based developers, HDIL was the key outperformer in terms of
sales bookings in Dec-Q thanks to successful launch of its Palghar project (4msf sold
since launch). However, sales booking for Oberoi and IBREL have come off due to
lack of new launches in 3Q. IBREL 2Q bookings were boosted by 10:90 scheme in
Lower Parel.
Approval delays were highlighted as a key challenge by all companies thereby
adversely impacting the new launch plans. However, most companies expect the
launches to gain momentum in FY12 (with approvals being in advanced stages) and
have outlined an aggressive launch plan for next one year.
Debt reduction plans taking a backseat
Debt levels across all companies with the exception of Unitech remained largely
stable or increased marginally. DLF (net debt at Rs207B, +Rs8B Q/Q) and Sobha
(net debt at Rs12.4B, flat Q/Q) attributed this to one offs i.e. pref share redemption
and high approval charges respectively during the quarter. However, both companies
reiterated their debt reduction plans via a combination of operational cash flows and
asset/land sales.
However although HDIL raised Rs13B via QIP, it did not report any reduction in
debt as funds raised were deployed in new project acquisitions. Unitech was the only
company to report meaningful reduction in net debt during Dec-Q (by Rs5.5B), aided
by warrant inflows (Rs3.7B) and operational cash flows.
Most companies (except Sobha) however have now started to buy land selectively,
funded via operational cash flows. We believe this is likely to keep the debt
reduction muted going ahead.
….Refinance concerns seem to be overdone although
interest costs are inching up
Refinance concerns however seem to be overdone with less than Rs10B payments
due in Mar-Q in the listed space as against the media reports of Rs150B (post the
loan for bribe scam). For FY12, debt repayments stand at ~Rs60B, however, most
companies indicated that they have debt facilities in place to refinance the same.
Average cost of debt though has increased by 50-100 bps across the board
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Property:: 3Q results review - Who won who lost? Numbers in brief
• 3Q results– Mumbai developers outperform; while Bangalore/NCR
players deliver mixed set of results - 3Q results were fairly decent for
the Indian property sector with the exception of Unitech/Prestige (30-
40% miss). Mumbai-based developers (IBREL/OBER/HDIL) were clear
outperformers beating expectations by 15-30%. While DLF missed the
consensus PAT estimates, operational results were largely in line. 3Q
earnings for Bangalore developers were however mixed (Sobha– in line;
Brigade- positive, Prestige–below expectations).
• Margins remain steady despite cost inflation concerns– EBITDA
margins improved across almost all companies (+0-8% Q/Q) aided by
(a) better pricing especially in Mumbai/NCR over the last two years, and
(b) reduced contribution from past projects (where margins were lower).
• Sales bookings were largely stable Q/Q for NCR (DLF/UT) and
Bangalore developers. Among Mumbai developers, HDIL was a clear
outperformer in terms of sales bookings in Dec-Q, thanks to the
successful launch of its Palghar project (~4msf/Rs7.6B pre sales since
launch), while others have seen pre-sales coming off Q/Q due to lack of
new launches. Approval delays were highlighted as a key challenge by
all almost companies thereby adversely impacting the new launch plans.
• Debt reduction plans taking a back seat with Unitech being the only
company in our coverage universe to report a meaningful reduction in
net debt in Dec-Q. Debt for almost all other listed players remained
stable or even increased marginally. More importantly, management
commentary on debt reduction seems to be toning down across
companies as cash flows are now selectively being used to buy land.
• Refinance concerns however seem to be overdone given less than
Rs10B debt repayments due in Mar-Q in the listed space as against the
media reports of a much higher estimate of Rs150B across all developers
(listed/unlisted). While FY12 debt repayments for companies in our
coverage universe stand at ~Rs60B, most companies indicated that they
have debt facilities in place to refinance the same. Average cost of debt
though has increased by 50-100bps across the board.
3QFY11 results review
3Q results were fairly decent for the Indian property sector with the exception of
Unitech/Prestige (30-40% earnings miss). While DLF missed the consensus PAT
estimates (on account of high minority interest), operational results were largely in
line. Mumbai-based developers (Indiabulls, Oberoi and HDIL) delivered strong set of
numbers beating the street and our estimates by 15-30%; results for Bangalore based
developers were rather mixed (Sobha – in line; Brigade – positive; Prestige,
Puravankara –below expectations).
Margins remained steady (+0-8% Q/Q) across almost all companies despite cost
inflation concerns. This is primarily attributable to (a) better pricing especially in
Mumbai/NCR over the last two years; (b) reduced contribution from past projects
(where margins were lower).
Bookings run rate stable Q/Q
Sales booking remained largely stable Q/Q for NCR developers (UT/DLF) and
Bangalore developers with the exception of Prestige. Prestige’s 2Q bookings were
boosted by launch of Kingfisher towers (pre sold 0.2msf Rs20Kpsf); adjusted for this
the bookings were stable Q/Q.
Among the Mumbai-based developers, HDIL was the key outperformer in terms of
sales bookings in Dec-Q thanks to successful launch of its Palghar project (4msf sold
since launch). However, sales booking for Oberoi and IBREL have come off due to
lack of new launches in 3Q. IBREL 2Q bookings were boosted by 10:90 scheme in
Lower Parel.
Approval delays were highlighted as a key challenge by all companies thereby
adversely impacting the new launch plans. However, most companies expect the
launches to gain momentum in FY12 (with approvals being in advanced stages) and
have outlined an aggressive launch plan for next one year.Bookings run rate stable Q/Q
Sales booking remained largely stable Q/Q for NCR developers (UT/DLF) and
Bangalore developers with the exception of Prestige. Prestige’s 2Q bookings were
boosted by launch of Kingfisher towers (pre sold 0.2msf Rs20Kpsf); adjusted for this
the bookings were stable Q/Q.
Among the Mumbai-based developers, HDIL was the key outperformer in terms of
sales bookings in Dec-Q thanks to successful launch of its Palghar project (4msf sold
since launch). However, sales booking for Oberoi and IBREL have come off due to
lack of new launches in 3Q. IBREL 2Q bookings were boosted by 10:90 scheme in
Lower Parel.
Approval delays were highlighted as a key challenge by all companies thereby
adversely impacting the new launch plans. However, most companies expect the
launches to gain momentum in FY12 (with approvals being in advanced stages) and
have outlined an aggressive launch plan for next one year.
Debt reduction plans taking a backseat
Debt levels across all companies with the exception of Unitech remained largely
stable or increased marginally. DLF (net debt at Rs207B, +Rs8B Q/Q) and Sobha
(net debt at Rs12.4B, flat Q/Q) attributed this to one offs i.e. pref share redemption
and high approval charges respectively during the quarter. However, both companies
reiterated their debt reduction plans via a combination of operational cash flows and
asset/land sales.
However although HDIL raised Rs13B via QIP, it did not report any reduction in
debt as funds raised were deployed in new project acquisitions. Unitech was the only
company to report meaningful reduction in net debt during Dec-Q (by Rs5.5B), aided
by warrant inflows (Rs3.7B) and operational cash flows.
Most companies (except Sobha) however have now started to buy land selectively,
funded via operational cash flows. We believe this is likely to keep the debt
reduction muted going ahead.
….Refinance concerns seem to be overdone although
interest costs are inching up
Refinance concerns however seem to be overdone with less than Rs10B payments
due in Mar-Q in the listed space as against the media reports of Rs150B (post the
loan for bribe scam). For FY12, debt repayments stand at ~Rs60B, however, most
companies indicated that they have debt facilities in place to refinance the same.
Average cost of debt though has increased by 50-100 bps across the board
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