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Mahindra Life Space Developer (MLIFE)
Property
2QFY12 with puts and takes. MLIFE reported revenues 10% lower than expectation
(+5% yoy, +15% qoq) though sales seem to have declined 64% qoq to Rs620 mn from
Rs1.7 bn in 1QFY12 due to absence of new launches. PAT jumped (+28% yoy, +84%
qoq) due to a sharp rise other income (+59% yoy, +99% qoq). We retain our BUY
rating, noting 52% upside to our target price of Rs450/share, at par with our March
2013E NAV.
EBITDA margin bounces back though revenue booking disappoints
EBITDA margin came in at 27.5% versus 21.2% in 1QFY12 and 26.2% in 2QFY11 as construction
cost dropped by 581 bps qoq and 411 bps yoy. This is close to a 14-quarter high and while we do
not factor it as sustainable, we find it as support for our FY2012E margin estimate of 26.6%.
MLIFE reported revenues of Rs938 mn (+5% yoy, +15% qoq, 10% below KIE estimate) and PAT at
Rs314 mn (+28% yoy, +84% qoq) due to a higher-than-expected other income of Rs182 mn.
No launches in 2QFY12 which likely drove weak sales in the quarter
MLIFE has not launched any project in 2QFY12 which means it has had only one launch in 1HFY12
out of the planned four. While this is attributed to approval delays and is something that we see
across the sector, this is a bigger issue for MLIFE as sales in 2HFY12E and FY2013E will likely be
driven by new launches given that it has completed sales in Eminente Aspen, Mahindra Splendor
Phase 2, Aura Phase 3, and Iris Court Phase 1. 2QFY12 sales declined to Rs620 mn versus Rs1.7 bn
in 1QFY12 and area sold declined to 0.1 mn sq. ft (0. 3 mn sq. ft in 1QFY12) which gets reflected
in the 64% qoq drop in sales value to Rs620 mn. Average realization climbed up to Rs5,167/sq. ft
versus Rs5,059/sq. ft in 1QFY12.
Mahindra World Cities await clarity
At Mahindra World City Chennai, the total number of customers at end-2QFY12 stood at 60 of
which 37 campuses/facilities are operational (58 at end-1QFY12 of which 37 were operational).
Total number of customers at Mahindra World City Jaipur increased to 35 (6 operational, 9 under
development) versus 34 customers at end-1QFY12 (5 operational, 8 under development).
Retain BUY rating with a target price of Rs450/share
Our March 2013E NAV estimate of Rs449 is based on (1) WACC of 16% for the standalone
development business, (2) DCF-based value for the almost fully leased out Chennai World City and
(3) Jaipur MWC at 1X P/BV. We see possible upsides from Jaipur MWC as we value it at 1X P/B
and would assign full DCF-based value when we see (1) clarity on DTC and subsequent absorption
and (2) at least a couple of residential launches in the MWC. Key risks to our recommendation are
(1) macro risks to demand and pricing in Mumbai and (2) uncertainty caused by DTC impacting
progress at World Cities.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mahindra Life Space Developer (MLIFE)
Property
2QFY12 with puts and takes. MLIFE reported revenues 10% lower than expectation
(+5% yoy, +15% qoq) though sales seem to have declined 64% qoq to Rs620 mn from
Rs1.7 bn in 1QFY12 due to absence of new launches. PAT jumped (+28% yoy, +84%
qoq) due to a sharp rise other income (+59% yoy, +99% qoq). We retain our BUY
rating, noting 52% upside to our target price of Rs450/share, at par with our March
2013E NAV.
EBITDA margin bounces back though revenue booking disappoints
EBITDA margin came in at 27.5% versus 21.2% in 1QFY12 and 26.2% in 2QFY11 as construction
cost dropped by 581 bps qoq and 411 bps yoy. This is close to a 14-quarter high and while we do
not factor it as sustainable, we find it as support for our FY2012E margin estimate of 26.6%.
MLIFE reported revenues of Rs938 mn (+5% yoy, +15% qoq, 10% below KIE estimate) and PAT at
Rs314 mn (+28% yoy, +84% qoq) due to a higher-than-expected other income of Rs182 mn.
No launches in 2QFY12 which likely drove weak sales in the quarter
MLIFE has not launched any project in 2QFY12 which means it has had only one launch in 1HFY12
out of the planned four. While this is attributed to approval delays and is something that we see
across the sector, this is a bigger issue for MLIFE as sales in 2HFY12E and FY2013E will likely be
driven by new launches given that it has completed sales in Eminente Aspen, Mahindra Splendor
Phase 2, Aura Phase 3, and Iris Court Phase 1. 2QFY12 sales declined to Rs620 mn versus Rs1.7 bn
in 1QFY12 and area sold declined to 0.1 mn sq. ft (0. 3 mn sq. ft in 1QFY12) which gets reflected
in the 64% qoq drop in sales value to Rs620 mn. Average realization climbed up to Rs5,167/sq. ft
versus Rs5,059/sq. ft in 1QFY12.
Mahindra World Cities await clarity
At Mahindra World City Chennai, the total number of customers at end-2QFY12 stood at 60 of
which 37 campuses/facilities are operational (58 at end-1QFY12 of which 37 were operational).
Total number of customers at Mahindra World City Jaipur increased to 35 (6 operational, 9 under
development) versus 34 customers at end-1QFY12 (5 operational, 8 under development).
Retain BUY rating with a target price of Rs450/share
Our March 2013E NAV estimate of Rs449 is based on (1) WACC of 16% for the standalone
development business, (2) DCF-based value for the almost fully leased out Chennai World City and
(3) Jaipur MWC at 1X P/BV. We see possible upsides from Jaipur MWC as we value it at 1X P/B
and would assign full DCF-based value when we see (1) clarity on DTC and subsequent absorption
and (2) at least a couple of residential launches in the MWC. Key risks to our recommendation are
(1) macro risks to demand and pricing in Mumbai and (2) uncertainty caused by DTC impacting
progress at World Cities.
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