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Ansal Properties & Infrastructure (CMP: Rs44)
Mkt Cap: Rs6.9bn; US$156m Bloomberg code (APIL IN)
Ansal Properties & Infrastructure Limited (APIL), a well-entrenched and experienced developer in North India, is taking firm strides towards regaining its old glory. APIL is leveraging its core competency of developing large integrated townships in tier II cities with focus on affordable housing. Impressive FY11 sales of >24msf (average realization, Rs1,067psf) underline this resurgence. With ~27msf in cumulative sales (~Rs20bn in value), the 3,530-acre Lucknow township has crossed the hump and, along with the upcoming 2,504-acre Greater Noida township and 108-acre Essencia II township in Gurgaon, is expected to drive accelerated profit growth. We estimate cash generation of >Rs21bn over FY12-14E (before land payments), which mitigates concerns on managing the Rs15.6bn debt (repayment of Rs6.4bn due in FY12). We initiate coverage with Outperformer and a 12-month price target of Rs120 (25% discount to FY12E NAV of Rs160/share). Any material step-up in land acquisition strategy and inability to refinance debt are key risks.
An integrated township developer; focus on affordable housing: Having delivered ~230msf in the last four decades, including ~98msf of mid-income housing townships, APIL is India’s leading township developer. It is executing 19 projects (311msf; APIL’s share at ~77%) with Lucknow and Greater Noida hi-tech townships among India’s largest. APIL’s 10,136-acre land bank (average cost of Rs180psf; ~74% acquired) further enhances its competitiveness.
A strong rebound from the lows: Quest to accumulate land for the two mega projects (Lucknow and Greater Noida) had led to a build-up of >Rs17bn of high-cost debt as of March 2010 and stifled growth as sales momentum waned over FY08-10. A Rs3.8bn capital-raising in FY11, solid operating performance, >Rs15bn customer advances and Rs1.8bn cash generation (before interest payout) have enabled APIL to entirely repay its high-cost debt and put the wheels back on the business. With strong demand momentum across townships, we expect APIL to sell ~52msf over FY12-14E.
A proxy to the affordable housing theme; Outperformer: APIL’s mid-income housing focus across projects has enabled it to sell a staggering 24msf of projects in FY11. Significant growth visibility in three of its largest projects (Lucknow, Greater Noida and Gurgaon) and >Rs30bn of pending cashflows on sold projects enhances comfort on near-term profit growth and mitigates concerns on high debt (gearing at 0.86x as of FY11E). At 4x FY12E earnings and a 72% discount to our FY12E NAV, we see a strong case for re-rating of the stock.
Key valuation metrics
As on 31 March
|
FY09
|
FY10
|
FY11E
|
FY12E
|
FY13E
|
Net sales (Rs m)
|
7,410
|
8,532
|
12,321
|
14,133
|
20,158
|
Adj. net profit (Rs m)
|
339
|
508
|
1,070
|
1,696
|
2,425
|
Shares in issue (m)
|
114
|
123
|
157
|
157
|
157
|
Adj. EPS (Rs)
|
3.0
|
4.1
|
6.8
|
10.8
|
15.4
|
% growth
|
(80.5)
|
38.4
|
64.6
|
58.5
|
42.9
|
PER (x)
|
14.7
|
10.7
|
6.5
|
4.1
|
2.9
|
Price/Book (x)
|
0.4
|
0.4
|
0.3
|
0.3
|
0.3
|
EV/EBITDA (x)
|
14.5
|
12.1
|
8.8
|
5.9
|
3.4
|
RoE (%)
|
2.6
|
3.6
|
6.2
|
8.0
|
10.1
|
RoCE (%)
|
4.9
|
5.9
|
8.0
|
10.5
|
17.2
|
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