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India Per Sq Ft Portable
2QFY12 – Another Slow Quarter Likely
#1. Is business bottoming out? — Not yet - 2QFY11 is likely be another muted
quarter- (1) launches have been slow as approvals are still pending; (2) sales likely to
be slow YoY given high prices coupled with increasing interest rates; (3) some pent-up
demand/supply for upcoming auspicious period around the festivities in Q3; (4)
extended monsoons and inflationary pressures impacting execution.
#2. Who will fare relatively better? — (1) Prestige – decent launches and sales in
Q2; (2) Unitech – good on launches (will likely meet guidance) and sales, but slow
execution will be a dampener; (3) Phoenix is likely to continue its performance on High
Street Phoenix (HSP) – update on new Market City projects will be a key focus area.
#3. And the not so good ones? — (1) DLF will likely post a disappointing operational
/ financial performance, given no launches. Deleveraging unlikely in Q2 given slow
execution - Gurgaon land sale (~Rs4.4b) and visible pipeline of more asset sales
should act as a support; (2) Oberoi – no new launches and rel slow execution in Q2.
#4. What will reported numbers look like? — Reported numbers are difficult to
predict given the volatility around POCM accounting. However, we expect a
directionally weak quarter as (a) Limited launches and slow sales given
approvals/pricing issues; (b) Slower execution given monsoons/tepid market
conditions; (c) Inflationary cost pressures impacting margins; (d) Interest rates will also
impact PAT.
#5. What to do with the sector? — Valuations are close to historic lows (on P/B); near
term catalysts on business unlikely. Valuations and view that interest rates are peaking
are supporting the sector in the recent past (sector in line with market in past 1/2m
while DLF has outperformed by 13%/8%). Our preference for Prestige/Oberoi/Phoenix
remains. Among large caps, DLF is better placed but Q2 will be a tough quarter
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Per Sq Ft Portable
2QFY12 – Another Slow Quarter Likely
#1. Is business bottoming out? — Not yet - 2QFY11 is likely be another muted
quarter- (1) launches have been slow as approvals are still pending; (2) sales likely to
be slow YoY given high prices coupled with increasing interest rates; (3) some pent-up
demand/supply for upcoming auspicious period around the festivities in Q3; (4)
extended monsoons and inflationary pressures impacting execution.
#2. Who will fare relatively better? — (1) Prestige – decent launches and sales in
Q2; (2) Unitech – good on launches (will likely meet guidance) and sales, but slow
execution will be a dampener; (3) Phoenix is likely to continue its performance on High
Street Phoenix (HSP) – update on new Market City projects will be a key focus area.
#3. And the not so good ones? — (1) DLF will likely post a disappointing operational
/ financial performance, given no launches. Deleveraging unlikely in Q2 given slow
execution - Gurgaon land sale (~Rs4.4b) and visible pipeline of more asset sales
should act as a support; (2) Oberoi – no new launches and rel slow execution in Q2.
#4. What will reported numbers look like? — Reported numbers are difficult to
predict given the volatility around POCM accounting. However, we expect a
directionally weak quarter as (a) Limited launches and slow sales given
approvals/pricing issues; (b) Slower execution given monsoons/tepid market
conditions; (c) Inflationary cost pressures impacting margins; (d) Interest rates will also
impact PAT.
#5. What to do with the sector? — Valuations are close to historic lows (on P/B); near
term catalysts on business unlikely. Valuations and view that interest rates are peaking
are supporting the sector in the recent past (sector in line with market in past 1/2m
while DLF has outperformed by 13%/8%). Our preference for Prestige/Oberoi/Phoenix
remains. Among large caps, DLF is better placed but Q2 will be a tough quarter
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