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Housing Development & Infrastructure
Buy Equity Research
In line with expectations: Positive operating cash flows in 2HFY11
What surprised us
HDIL reported 4QFY11 PAT of Rs1.97bn (vs. GSe of Rs1.8bn) and sales of
Rs5.2 bn, up 8% and 21% yoy, respectively. EBITDA margin of 49%
decreased by 973 bp qoq due to lower TDR realizations of Rs2,600/sq ft.
HDIL reported TDR sales of 0.9 mn sq ft and land sales of Rs3bn in Andheri.
Highlights of results, conference call, and management guidance: 1)
TDR sales of about 1mn sq ft per quarter in FY12 at an average realization of
Rs2,500/sq ft; 2) Debt reduction of 20%-25% by March 2012 (we are
assuming a 10% reduction); 3) HDIL generated positive cash flow from
operations through increased sales in 2HFY11; 4) Management maintained
its policy of recognizing revenues only when a project is completed for FY12.
Consequently, HDIL stated it could see revenue recognized from four
projects in FY12, as these projects are completed; 5) Launch of projects in
Panvel, Shahad, and Boisar is likely in the near term. We believe that
launched/forthcoming projects indicate a cumulative sales value of Rs144bn
and cash flow potential of Rs90bn vs. the current EV of Rs96bn (Exhibit 2).
What to do with the stock
We raise our FY12E/FY13E EPS by 19%/14% to reflect the transfer of
revenues to FY12E from FY11 due to delayed receipts from land sales. We
also introduce FY14E EPS. We increase our 12-month RNAV-based target
price to Rs216 from Rs211 to factor in higher achieved prices in launched
properties. Our TP is set at a 30% discount (unchanged) to our FY2012E
NAV of Rs337. We maintain our Buy rating on HDIL. The stock looks
attractively valued trading at FY2013E P/B of 0.6X vs. the sector average of
1.2X. Key risks include execution delays inherent in slum rehabilitation
projects, sharp correction in prices in Mumbai.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Housing Development & Infrastructure
Buy Equity Research
In line with expectations: Positive operating cash flows in 2HFY11
What surprised us
HDIL reported 4QFY11 PAT of Rs1.97bn (vs. GSe of Rs1.8bn) and sales of
Rs5.2 bn, up 8% and 21% yoy, respectively. EBITDA margin of 49%
decreased by 973 bp qoq due to lower TDR realizations of Rs2,600/sq ft.
HDIL reported TDR sales of 0.9 mn sq ft and land sales of Rs3bn in Andheri.
Highlights of results, conference call, and management guidance: 1)
TDR sales of about 1mn sq ft per quarter in FY12 at an average realization of
Rs2,500/sq ft; 2) Debt reduction of 20%-25% by March 2012 (we are
assuming a 10% reduction); 3) HDIL generated positive cash flow from
operations through increased sales in 2HFY11; 4) Management maintained
its policy of recognizing revenues only when a project is completed for FY12.
Consequently, HDIL stated it could see revenue recognized from four
projects in FY12, as these projects are completed; 5) Launch of projects in
Panvel, Shahad, and Boisar is likely in the near term. We believe that
launched/forthcoming projects indicate a cumulative sales value of Rs144bn
and cash flow potential of Rs90bn vs. the current EV of Rs96bn (Exhibit 2).
What to do with the stock
We raise our FY12E/FY13E EPS by 19%/14% to reflect the transfer of
revenues to FY12E from FY11 due to delayed receipts from land sales. We
also introduce FY14E EPS. We increase our 12-month RNAV-based target
price to Rs216 from Rs211 to factor in higher achieved prices in launched
properties. Our TP is set at a 30% discount (unchanged) to our FY2012E
NAV of Rs337. We maintain our Buy rating on HDIL. The stock looks
attractively valued trading at FY2013E P/B of 0.6X vs. the sector average of
1.2X. Key risks include execution delays inherent in slum rehabilitation
projects, sharp correction in prices in Mumbai.
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