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Mumbai logjam
HDIL’s 1Q results were driven land sales. TDR revenues dropped 22%
QoQ on lower volumes as stagnant Mumbai property markets continue to
impact TDR demand. With local elections approaching in Mumbai,
visibility on redevelopment projects or airport project gaining traction
anytime soon is bleak. We lower NAV & TP by 12% as we build in delays
in rehab projects and raise Mar’12 net debt target by Rs4bn.
FSI sale recognition boosts 1Q; TDR revenues down
HDIL’s 1QFY12 profits fell 11% YoY / grew 6% YoY to Rs2.1bn – higher than
initial expectations as HDIL booked remaining Rs3.3bn revenues on a FSI sale
deal (Andheri) concluded earlier in Dec’10. TDR revenues declined 22%
QoQ/47% YoY to Rs1.7bn as volumes fell c.25% QoQ to 0.65m sf. TDR
pricing was flat QoQ @Rs2600/sf, down 15% from peak recorded in 3QFY11.
Ebitda margins moved up 4ppts QoQ to 53% on higher land sale component.
City projects stuck; looking to far-off suburbs for growth
No progress was made towards taking the airport project ahead to Phase II
during the quarter. Legal/approval related issues also continue to hinder any
significant progress on HDIL’s high-value redevelopment projects viz. Malvani
(HDIL appealing cancellation), BKC (more approvals needed), Ghatkopar,
Santacruz, Kandivali (slow pace of rehab). With sales slow on existing
Mumbai city projects as well (10% sold at one new launch during 1Q); HDIL
is looking to launch projects in suburbs (Panvel, Shahad) for growth.
Additionally, company plans to increase FSI sales pace at Vasai-Virar.
Small debt reduction QoQ; Sceptical on management target
HDIL reduced its net debt by Rs534m or 1% during 1Q, helped by excess
cash received from its large deals done earlier in FY11. Management targets
to reduce debt by Rs15-20% (Rs6-8bn) during FY12 as Rs8bn of inflows are
still outstanding on its land deals. However, given HDIL’s weak track record of
balance sheet discipline, we build in a lower Rs4bn reduction now.
Lower NAV and TP by 12%; Maintain U-PF
With progress on Mumbai redevelopment projects slow, we build in delays to
project launches. We also increase our Mar12 net debt estimate by Rs4bn to
Rs37bn. Overall, we cut HDIL’s Mar12 NAV 12% to Rs183/share and set our
TP at a 30% discount. With no visible progress on airport project or Mumbai
property market recovery, we maintain U-PF.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mumbai logjam
HDIL’s 1Q results were driven land sales. TDR revenues dropped 22%
QoQ on lower volumes as stagnant Mumbai property markets continue to
impact TDR demand. With local elections approaching in Mumbai,
visibility on redevelopment projects or airport project gaining traction
anytime soon is bleak. We lower NAV & TP by 12% as we build in delays
in rehab projects and raise Mar’12 net debt target by Rs4bn.
FSI sale recognition boosts 1Q; TDR revenues down
HDIL’s 1QFY12 profits fell 11% YoY / grew 6% YoY to Rs2.1bn – higher than
initial expectations as HDIL booked remaining Rs3.3bn revenues on a FSI sale
deal (Andheri) concluded earlier in Dec’10. TDR revenues declined 22%
QoQ/47% YoY to Rs1.7bn as volumes fell c.25% QoQ to 0.65m sf. TDR
pricing was flat QoQ @Rs2600/sf, down 15% from peak recorded in 3QFY11.
Ebitda margins moved up 4ppts QoQ to 53% on higher land sale component.
City projects stuck; looking to far-off suburbs for growth
No progress was made towards taking the airport project ahead to Phase II
during the quarter. Legal/approval related issues also continue to hinder any
significant progress on HDIL’s high-value redevelopment projects viz. Malvani
(HDIL appealing cancellation), BKC (more approvals needed), Ghatkopar,
Santacruz, Kandivali (slow pace of rehab). With sales slow on existing
Mumbai city projects as well (10% sold at one new launch during 1Q); HDIL
is looking to launch projects in suburbs (Panvel, Shahad) for growth.
Additionally, company plans to increase FSI sales pace at Vasai-Virar.
Small debt reduction QoQ; Sceptical on management target
HDIL reduced its net debt by Rs534m or 1% during 1Q, helped by excess
cash received from its large deals done earlier in FY11. Management targets
to reduce debt by Rs15-20% (Rs6-8bn) during FY12 as Rs8bn of inflows are
still outstanding on its land deals. However, given HDIL’s weak track record of
balance sheet discipline, we build in a lower Rs4bn reduction now.
Lower NAV and TP by 12%; Maintain U-PF
With progress on Mumbai redevelopment projects slow, we build in delays to
project launches. We also increase our Mar12 net debt estimate by Rs4bn to
Rs37bn. Overall, we cut HDIL’s Mar12 NAV 12% to Rs183/share and set our
TP at a 30% discount. With no visible progress on airport project or Mumbai
property market recovery, we maintain U-PF.
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