Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Puravankara Projects (PVKP)
Property
Reduce target price on higher debt and cost over-runs. Puravankara’s debt has
increased for the fourth straight quarter in a row (now 0.7X D/E). Cost overruns in
Venezia and Puravankara’s low-cost housing model in a higher inflationary environment
raise concerns of similar overruns in other projects. We retain our REDUCE
recommendation and cut target price to Rs100/share based on these concerns and on
increasing our WACC assumption to 16% (from 14% earlier).
3QFY11 impacted by cost overruns in Venezia
PVKP reported 3QFY11 revenues of Rs1.7 bn (+137% yoy, +12% qoq, 13% above estimate) but
EBITDA of Rs362 mn (+35% yoy, -6% qoq) is 19% lower than our estimate. PVKP’s Venezia
project in Yelahanka, Bangalore (2.1 mn sq. ft residential project) has been delayed which has
resulted in upward revisions in cost estimates including higher interest costs. PVKP clarified that
the entire impact of the increase in this project cost has been factored in 3QFY11.
No issues with volumes, PVKP on track to meet FY2011E target of 3 mn sq. ft
Puravankara, along with subsidiary Provident, has sold 2.3 mn sq. ft in 9MFY11. Even assuming it
manages to meet 3QFY11 sales volume of 0.8 mn sq. ft, it is on track to meet its FY2011E target
of 3 mn sq. ft. Sales realization improved for Puravankara (Rs3,255/sq ft vs. Rs3,140 in 2QFY11)
but declined marginally for Provident (Rs1,981/sq ft vs. Rs2,009/sq ft in 2QFY11).
Debt continues to increase for the fourth quarter in a row
After remaining steady all through the downturn, debt has increased sequentially for the past four
quarters and is currently down to Rs10.5 bn from Rs8.3 bn as of end-3QFY10 with the biggest
qoq jump coming in 3QFY11 (Rs758 mn). D/E has increased to 0.7X as on end-3QFY11 versus
0.6X at end-2QFY11 and at end-3QFY10.
We retain reduce; cut target price to Rs100/share
We are cutting our target price to Rs100/share (earlier Rs122/share) led by (1) higher WACC
assumption of 16% and (2) factoring in cost overruns in Venezia and (3) raising our cost estimates
by 5% for a few other long dated projects given similar cost escalation risks and (4) higher net
debt levels than earlier (Rs9.9 bn in FY2012E versus Rs8.7bn earlier). We have marginally cut our
FY2011E and FY2012E earnings estimates by 1% and 1.3%, respectively.
Reduce NAV estimate to Rs100/share
We are cutting our NAV estimate to Rs100/share led by (1) a 200 bps increase in our WACC
assumption to 16%, (2) higher debt in FY2012E (Rs9.9 bn versus Rs8.7 bn earlier) and (3)
selective cost increases in projects that are in execution and more than four years post
launch.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Puravankara Projects (PVKP)
Property
Reduce target price on higher debt and cost over-runs. Puravankara’s debt has
increased for the fourth straight quarter in a row (now 0.7X D/E). Cost overruns in
Venezia and Puravankara’s low-cost housing model in a higher inflationary environment
raise concerns of similar overruns in other projects. We retain our REDUCE
recommendation and cut target price to Rs100/share based on these concerns and on
increasing our WACC assumption to 16% (from 14% earlier).
3QFY11 impacted by cost overruns in Venezia
PVKP reported 3QFY11 revenues of Rs1.7 bn (+137% yoy, +12% qoq, 13% above estimate) but
EBITDA of Rs362 mn (+35% yoy, -6% qoq) is 19% lower than our estimate. PVKP’s Venezia
project in Yelahanka, Bangalore (2.1 mn sq. ft residential project) has been delayed which has
resulted in upward revisions in cost estimates including higher interest costs. PVKP clarified that
the entire impact of the increase in this project cost has been factored in 3QFY11.
No issues with volumes, PVKP on track to meet FY2011E target of 3 mn sq. ft
Puravankara, along with subsidiary Provident, has sold 2.3 mn sq. ft in 9MFY11. Even assuming it
manages to meet 3QFY11 sales volume of 0.8 mn sq. ft, it is on track to meet its FY2011E target
of 3 mn sq. ft. Sales realization improved for Puravankara (Rs3,255/sq ft vs. Rs3,140 in 2QFY11)
but declined marginally for Provident (Rs1,981/sq ft vs. Rs2,009/sq ft in 2QFY11).
Debt continues to increase for the fourth quarter in a row
After remaining steady all through the downturn, debt has increased sequentially for the past four
quarters and is currently down to Rs10.5 bn from Rs8.3 bn as of end-3QFY10 with the biggest
qoq jump coming in 3QFY11 (Rs758 mn). D/E has increased to 0.7X as on end-3QFY11 versus
0.6X at end-2QFY11 and at end-3QFY10.
We retain reduce; cut target price to Rs100/share
We are cutting our target price to Rs100/share (earlier Rs122/share) led by (1) higher WACC
assumption of 16% and (2) factoring in cost overruns in Venezia and (3) raising our cost estimates
by 5% for a few other long dated projects given similar cost escalation risks and (4) higher net
debt levels than earlier (Rs9.9 bn in FY2012E versus Rs8.7bn earlier). We have marginally cut our
FY2011E and FY2012E earnings estimates by 1% and 1.3%, respectively.
Reduce NAV estimate to Rs100/share
We are cutting our NAV estimate to Rs100/share led by (1) a 200 bps increase in our WACC
assumption to 16%, (2) higher debt in FY2012E (Rs9.9 bn versus Rs8.7 bn earlier) and (3)
selective cost increases in projects that are in execution and more than four years post
launch.
No comments:
Post a Comment