Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Highlights of Q3FY11 results
Unitech reported weak Q3FY11 numbers with revenues down 15% yoy at Rs6.6bn, ~14% below our estimates of
Rs7.7bn. Labour constraints due to Commonwealth Games affected construction in October 2010, resulting in lower
revenue recognition for the quarter.
Consolidated EBITDA came in at Rs2.1bn (up 12% yoy but down 17% qoq). EBITDA margins came in at 31.6% (39% in
Q2FY11, 24% in Q3FY10) vs. our estimate of 35% for the quarter. Margins were lower as the company recognized loss
of ~Rs380m from sale of its aircraft (sale value - Rs500m) during the quarter.
Tax rate for the quarter increased to 40% (24% in Q2FY11) mainly due to an accounting adjustment whereby loss from
sale of aircraft was recognized in a subsidiary which, post consolidation, reduced the profit before tax but tax expense
remained unchanged.
Lower other income and high tax expense (tax rate - 40%) resulted in a lower PAT of Rs1.1bn (down 37% yoy and 36%
qoq), ~37% below our estimates of Rs1.77bn. PAT margins stood at 17% (down 600bps yoy and 10% qoq) against our
estimate of 22% for the quarter.
Gross Debt came down by ~Rs3.2bn to Rs63.8bn (including Rs5.3bn of telecom debt which the company expects to be
transferred to Unitech Infra post demerger). Promoter infused Rs3.8bn on conversion of warrants during the quarter.
Real estate Net Debt of the company now stands at Rs46bn with gearing of 0.4x (0.48x in Q2FY11).
During the quarter, Unitech acquired ~50 acres of land in Noida (along the expressway; ahead of Unitech Grande)
worth ~Rs5bn and paid ~Rs400m in advances for the acquisition. The land has a saleable area of >6.5msf (at an FSI of
2.75) with FSI cost of ~Rs800 psf. The company plans to launch mid-income housing project on the parcel. The Noida
authority requires payment for the land to be made in installments over 7-8 year period.
Operational performance
Marginal improvement in volumes qoq; significant ramp-up in launches planned
During the quarter, Unitech has sold ~2.2msf of area (Q2FY11 – 2msf) with sales value of ~Rs10.3bn and average
realisation of Rs4,673psf. NCR continues to dominate sales with ~1.6msf (Gurgaon – 1.1msf, Noida + G. Noida – 0.5msf)
of sales coming from this region. For 9MFY11, the company has achieved volumes of 7.2msf with sales value of ~Rs33bn.
While volumes picked up qoq, they were below our estimated run-rate of ~3msf per quarter as sales in Gurgaon as well
as other cities failed to grow sequentially. With 9MFY11 sales of 7.2msf, we believe Unitech will not be able to meet our
FY11 volume estimates of 12msf and sales value estimates of Rs60bn.
However, Unitech now intends to ramp up new project launches. In this regard, the company launched seven projects in
Noida, Mohali, and Gurgaon since Jan-11 and plans to launch another 10msf of mid-income projects in the next four
months.
Increase in delivery from past projects (1.1msf)
Construction has been progressing well with 1.1msf of area delivered from past projects (0.9msf in Q2FY11) and
additional 3.6msf of projects reaching handover/finishing stage (17.2msf in total).
Pre-construction activity completed for >82% of current projects; workforce up by ~15%
From recent projects of 15.9msf, structure has been completed on 3.7msf of projects (Nil in Q2FY11) while piling is in
progress on another 9.4msf. Also, workforce during the quarter has been increased by ~16% to ~22,500 employees to
expedite construction and delivery.
VALUATIONS & VIEW
Q4FY11 has been a disappointing quarter for Unitech both in terms of operational (volumes slowdown, lower
construction) as well as non-operational developments. Operationally, while the company is planning to ramp-up
launches (~10msf in next 4 months) and execution (~15% increase in workforce), we believe the volumes slowdown will
continue unless there is some correction (10-20%) in prices. Given the muted performance in 9MFY11 (7.2msf of sales),
we have reduce our volume estimates for Unitech to 10msf annually (from 12msf earlier). Also, we have adjusted our
assumptions for telecom venture (Uninor), Mumbai Slum rehab projects as well as land bank valuations to account for
uncertainties as well as higher risk of execution delays. Resultant, our FY12E NAV has been revised downward to
Rs76/share. Also, profit estimates get reduced by 25% in FY11 and 30% in FY12. At par with FY12E NAV, we revise our
12-month target price to Rs76/share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Highlights of Q3FY11 results
Unitech reported weak Q3FY11 numbers with revenues down 15% yoy at Rs6.6bn, ~14% below our estimates of
Rs7.7bn. Labour constraints due to Commonwealth Games affected construction in October 2010, resulting in lower
revenue recognition for the quarter.
Consolidated EBITDA came in at Rs2.1bn (up 12% yoy but down 17% qoq). EBITDA margins came in at 31.6% (39% in
Q2FY11, 24% in Q3FY10) vs. our estimate of 35% for the quarter. Margins were lower as the company recognized loss
of ~Rs380m from sale of its aircraft (sale value - Rs500m) during the quarter.
Tax rate for the quarter increased to 40% (24% in Q2FY11) mainly due to an accounting adjustment whereby loss from
sale of aircraft was recognized in a subsidiary which, post consolidation, reduced the profit before tax but tax expense
remained unchanged.
Lower other income and high tax expense (tax rate - 40%) resulted in a lower PAT of Rs1.1bn (down 37% yoy and 36%
qoq), ~37% below our estimates of Rs1.77bn. PAT margins stood at 17% (down 600bps yoy and 10% qoq) against our
estimate of 22% for the quarter.
Gross Debt came down by ~Rs3.2bn to Rs63.8bn (including Rs5.3bn of telecom debt which the company expects to be
transferred to Unitech Infra post demerger). Promoter infused Rs3.8bn on conversion of warrants during the quarter.
Real estate Net Debt of the company now stands at Rs46bn with gearing of 0.4x (0.48x in Q2FY11).
During the quarter, Unitech acquired ~50 acres of land in Noida (along the expressway; ahead of Unitech Grande)
worth ~Rs5bn and paid ~Rs400m in advances for the acquisition. The land has a saleable area of >6.5msf (at an FSI of
2.75) with FSI cost of ~Rs800 psf. The company plans to launch mid-income housing project on the parcel. The Noida
authority requires payment for the land to be made in installments over 7-8 year period.
Operational performance
Marginal improvement in volumes qoq; significant ramp-up in launches planned
During the quarter, Unitech has sold ~2.2msf of area (Q2FY11 – 2msf) with sales value of ~Rs10.3bn and average
realisation of Rs4,673psf. NCR continues to dominate sales with ~1.6msf (Gurgaon – 1.1msf, Noida + G. Noida – 0.5msf)
of sales coming from this region. For 9MFY11, the company has achieved volumes of 7.2msf with sales value of ~Rs33bn.
While volumes picked up qoq, they were below our estimated run-rate of ~3msf per quarter as sales in Gurgaon as well
as other cities failed to grow sequentially. With 9MFY11 sales of 7.2msf, we believe Unitech will not be able to meet our
FY11 volume estimates of 12msf and sales value estimates of Rs60bn.
However, Unitech now intends to ramp up new project launches. In this regard, the company launched seven projects in
Noida, Mohali, and Gurgaon since Jan-11 and plans to launch another 10msf of mid-income projects in the next four
months.
Increase in delivery from past projects (1.1msf)
Construction has been progressing well with 1.1msf of area delivered from past projects (0.9msf in Q2FY11) and
additional 3.6msf of projects reaching handover/finishing stage (17.2msf in total).
Pre-construction activity completed for >82% of current projects; workforce up by ~15%
From recent projects of 15.9msf, structure has been completed on 3.7msf of projects (Nil in Q2FY11) while piling is in
progress on another 9.4msf. Also, workforce during the quarter has been increased by ~16% to ~22,500 employees to
expedite construction and delivery.
VALUATIONS & VIEW
Q4FY11 has been a disappointing quarter for Unitech both in terms of operational (volumes slowdown, lower
construction) as well as non-operational developments. Operationally, while the company is planning to ramp-up
launches (~10msf in next 4 months) and execution (~15% increase in workforce), we believe the volumes slowdown will
continue unless there is some correction (10-20%) in prices. Given the muted performance in 9MFY11 (7.2msf of sales),
we have reduce our volume estimates for Unitech to 10msf annually (from 12msf earlier). Also, we have adjusted our
assumptions for telecom venture (Uninor), Mumbai Slum rehab projects as well as land bank valuations to account for
uncertainties as well as higher risk of execution delays. Resultant, our FY12E NAV has been revised downward to
Rs76/share. Also, profit estimates get reduced by 25% in FY11 and 30% in FY12. At par with FY12E NAV, we revise our
12-month target price to Rs76/share.
No comments:
Post a Comment