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Indiabulls Real Estate Overweight
INRL.BO, IBREL IN
1QFY12: Core profit disappoints on low revenue
recognition. Insiders remain buyers
IBREL’s 1Q12 core earnings were below estimates on account of muted
revenue recognition from existing order book and low margins (historically
low ASP and increase in project cost). Even though on an operating basis,
company performance remains reasonably satisfactory (pre -sales and leasing
tracking above our estimates) and promoters have been consistently increasing
their stake in the company (5% additional in Jun-Q), we think until profit
recognition accelerates from under construction inventory and income flows
through from Lower Parel, markets may not sit up and take notice of cheap
asset valuations here. We are OW but see limited catalyst over the short term.
Financial performance- 1] Net income of Rs660M (+227% Y/Y), 15%
below our expectations but above consensus (Rs 500MM) boosted by
higher other income (Rs1.4B) during the quarter (one off). 2] Core EBITDA
margins were subdued at 12% levels due to low revenue recognition from
ongoing projects even as gross margins improved to 33% in 1Q vs. 26% in
4Q. 3] Net Debt (adj. for power) increased by Rs1.4B during the Q due to
new land acquisition of Rs2.5B (~52 acres).
Operational highlights during the Q– 1] New bookings in Jun-Q stood at
Rs3.8B/0.8msf, 32% lower than Mar-Q levels, no new big launches were
done during the Q; 2] Incremental leasing of 0.18 msf done in Lower Parel
taking total leased area to 1.8 msf (of total 3.3msf) 3] Area under
construction increased by 1msf during the Q to 17.2msf; 4] The company
has also been awarded the contract for NPR , a key 18KM road providing
alternate connectivity from Delhi to Gurgaon and running close to IBREL’s
parcels 5] Company hopeful of restarting construction at residential towers
in Lower Parel in another Q as it awaits clearance from pollution control
board.
Key guidance variables for FY12-1] Target revenue growth of 30-40%
Y/Y with Gross margin between 30-40% 2] Near term planned launches in
Panvel and Worli (luxury residential) 3] Demerger of power business
expected in 3 months as shareholder/creditor approvals have come through.
Promoters remain buyers - Promoters have increased their holding in
IBREL by 5% in June–Q to 28%
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Indiabulls Real Estate Overweight
INRL.BO, IBREL IN
1QFY12: Core profit disappoints on low revenue
recognition. Insiders remain buyers
IBREL’s 1Q12 core earnings were below estimates on account of muted
revenue recognition from existing order book and low margins (historically
low ASP and increase in project cost). Even though on an operating basis,
company performance remains reasonably satisfactory (pre -sales and leasing
tracking above our estimates) and promoters have been consistently increasing
their stake in the company (5% additional in Jun-Q), we think until profit
recognition accelerates from under construction inventory and income flows
through from Lower Parel, markets may not sit up and take notice of cheap
asset valuations here. We are OW but see limited catalyst over the short term.
Financial performance- 1] Net income of Rs660M (+227% Y/Y), 15%
below our expectations but above consensus (Rs 500MM) boosted by
higher other income (Rs1.4B) during the quarter (one off). 2] Core EBITDA
margins were subdued at 12% levels due to low revenue recognition from
ongoing projects even as gross margins improved to 33% in 1Q vs. 26% in
4Q. 3] Net Debt (adj. for power) increased by Rs1.4B during the Q due to
new land acquisition of Rs2.5B (~52 acres).
Operational highlights during the Q– 1] New bookings in Jun-Q stood at
Rs3.8B/0.8msf, 32% lower than Mar-Q levels, no new big launches were
done during the Q; 2] Incremental leasing of 0.18 msf done in Lower Parel
taking total leased area to 1.8 msf (of total 3.3msf) 3] Area under
construction increased by 1msf during the Q to 17.2msf; 4] The company
has also been awarded the contract for NPR , a key 18KM road providing
alternate connectivity from Delhi to Gurgaon and running close to IBREL’s
parcels 5] Company hopeful of restarting construction at residential towers
in Lower Parel in another Q as it awaits clearance from pollution control
board.
Key guidance variables for FY12-1] Target revenue growth of 30-40%
Y/Y with Gross margin between 30-40% 2] Near term planned launches in
Panvel and Worli (luxury residential) 3] Demerger of power business
expected in 3 months as shareholder/creditor approvals have come through.
Promoters remain buyers - Promoters have increased their holding in
IBREL by 5% in June–Q to 28%
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