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Established player in the residential segment: Mahindra Lifespaces (MLIFE)
has developed a strong brand franchise as a premium residential builder in Mumbai,
Pune and NCR. Its reputation has helped it to earn strong customer preference,
with ~81% of ongoing 3.4msf being sold out. We believe that with its low unsold
inventory, traction in new launches would be a catalyst to boost sales momentum.
Steady execution progress across projects offers on-time delivery comfort.
Steady progress in SEZ projects: MLIFE has been making steady progress in
its SEZ projects in Jaipur and Chennai. Almost 300 acres of the IT SEZ area and
~90 acres in the handicraft and light engineering space are leased to key tenants
in the Jaipur SEZ. Cost inflation and high land prices have led several companies
to opt for a tier-III location as a new business destination. This augurs well for the
potential of the Jaipur SEZ.
Meaningful traction in new acquisitions could be a key trigger: MLIFE is
well placed to augment the scale of its business with four pipeline SEZs in the
land acquisition or MoU stage in North Chennai and on the Mumbai-Pune highway.
MLIFE recently acquired two projects in Gujarat, aggregating ~6,500acres. The
North Chennai SEZ is likely to break ground in early FY13.
Key risks: These include (a) a negative impact on SEZ demand due to the direct
tax code and (b) the proposed Land Acquisition Bill, which could impact plans for
large format integrated development.
Valuation and view: The recent drop in share price offers an attractive entry
point with a strong upside of 50%. Its (a) strong brand equity, (b) client relationships
and (c) strong balance sheet (net DER(x) of 0.3x) offer a robust growth outlook in
both residential and SEZ verticals. Our FY12 SOTP value for MLIFE is INR564/
share. The stock trades at a ~47% discount to our SOTP value of INR564, 6x
FY13E EPS of INR48.9 and 0.9x FY13E BV. Maintain Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Established player in the residential segment: Mahindra Lifespaces (MLIFE)
has developed a strong brand franchise as a premium residential builder in Mumbai,
Pune and NCR. Its reputation has helped it to earn strong customer preference,
with ~81% of ongoing 3.4msf being sold out. We believe that with its low unsold
inventory, traction in new launches would be a catalyst to boost sales momentum.
Steady execution progress across projects offers on-time delivery comfort.
Steady progress in SEZ projects: MLIFE has been making steady progress in
its SEZ projects in Jaipur and Chennai. Almost 300 acres of the IT SEZ area and
~90 acres in the handicraft and light engineering space are leased to key tenants
in the Jaipur SEZ. Cost inflation and high land prices have led several companies
to opt for a tier-III location as a new business destination. This augurs well for the
potential of the Jaipur SEZ.
Meaningful traction in new acquisitions could be a key trigger: MLIFE is
well placed to augment the scale of its business with four pipeline SEZs in the
land acquisition or MoU stage in North Chennai and on the Mumbai-Pune highway.
MLIFE recently acquired two projects in Gujarat, aggregating ~6,500acres. The
North Chennai SEZ is likely to break ground in early FY13.
Key risks: These include (a) a negative impact on SEZ demand due to the direct
tax code and (b) the proposed Land Acquisition Bill, which could impact plans for
large format integrated development.
Valuation and view: The recent drop in share price offers an attractive entry
point with a strong upside of 50%. Its (a) strong brand equity, (b) client relationships
and (c) strong balance sheet (net DER(x) of 0.3x) offer a robust growth outlook in
both residential and SEZ verticals. Our FY12 SOTP value for MLIFE is INR564/
share. The stock trades at a ~47% discount to our SOTP value of INR564, 6x
FY13E EPS of INR48.9 and 0.9x FY13E BV. Maintain Buy.
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