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Real Estate
Potential Result Outperformers: Sobha
Potential Result Underperformers: DLF
Result Expectations – Key Highlights
We expect muted performance in 2Q from most of the real estate developers
given the monsoon months and limited launches in Mumbai and NCR. We expect
the volume to be strong for the South India players given slew of launches since
June 2011. The debt levels are expected to remain flat given the benefits of non
core asset sales (DLF and HDIL) likely to flow in from 3Q while for other muted
volumes is unlikely to help deleveraging. Since the festive season starts from 3Q,
we expect to see host of launches in October which should set the tone for rest of
the fiscal.
DLF - We expect DLF to report muted pre sales at ~2mn sq ft given lack of new
launches in this quarter. But we do expect the volume to pick pace in the festive
season as it prepares for new launches in North India. Therefore for 2Q we
expect revenue to drop by 10% QoQ to Rs22bn. The EBIDTA margin is expected
to inch up further to 47% given the focus on plotted development. The drop in
revenue and high interest and taxes will lead to drop in earnings to Rs3.4bn.
Unitech –Unitech continued on its aggressive launch strategy in 2Q as well
and we expect it to manage another ~2mn sq ft of bookings. But we expect the
earnings to remains muted given execution challenges. But we do expect the
margin to improve from the subdued 20% in 1Q to normalized levels of 28%. This
should lead to sharp jump in earnings to Rs1.37bn from Rs983mn in 1Q.
HDIL –HDIL earnings will be substantially dependent on the FSI sale. Our
estimate of Rs6bn of sales includes Rs4.5n from FSI sale in Goregaon project
and Virar while the remaining from TDR sales. The revenue from the
development projects are expected to kick in from 2HFY12.
Sobha –We expect strong volume performance from Sobha given strong pace
of new launches including Gurgaon. Sobha launched its north Bangalore project
in late June while the Gurgaon project was launched in July. Also due to its
increased stake in one of the Bangalore residential project we expect the revenue
to increase by 20% QoQ to Rs3.8bn leading to 34% increase in earnings. But we
expect the debt levels to remain flat in 2Q given dividend payout and continued
investment in new launches.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Real Estate
Potential Result Outperformers: Sobha
Potential Result Underperformers: DLF
Result Expectations – Key Highlights
We expect muted performance in 2Q from most of the real estate developers
given the monsoon months and limited launches in Mumbai and NCR. We expect
the volume to be strong for the South India players given slew of launches since
June 2011. The debt levels are expected to remain flat given the benefits of non
core asset sales (DLF and HDIL) likely to flow in from 3Q while for other muted
volumes is unlikely to help deleveraging. Since the festive season starts from 3Q,
we expect to see host of launches in October which should set the tone for rest of
the fiscal.
DLF - We expect DLF to report muted pre sales at ~2mn sq ft given lack of new
launches in this quarter. But we do expect the volume to pick pace in the festive
season as it prepares for new launches in North India. Therefore for 2Q we
expect revenue to drop by 10% QoQ to Rs22bn. The EBIDTA margin is expected
to inch up further to 47% given the focus on plotted development. The drop in
revenue and high interest and taxes will lead to drop in earnings to Rs3.4bn.
Unitech –Unitech continued on its aggressive launch strategy in 2Q as well
and we expect it to manage another ~2mn sq ft of bookings. But we expect the
earnings to remains muted given execution challenges. But we do expect the
margin to improve from the subdued 20% in 1Q to normalized levels of 28%. This
should lead to sharp jump in earnings to Rs1.37bn from Rs983mn in 1Q.
HDIL –HDIL earnings will be substantially dependent on the FSI sale. Our
estimate of Rs6bn of sales includes Rs4.5n from FSI sale in Goregaon project
and Virar while the remaining from TDR sales. The revenue from the
development projects are expected to kick in from 2HFY12.
Sobha –We expect strong volume performance from Sobha given strong pace
of new launches including Gurgaon. Sobha launched its north Bangalore project
in late June while the Gurgaon project was launched in July. Also due to its
increased stake in one of the Bangalore residential project we expect the revenue
to increase by 20% QoQ to Rs3.8bn leading to 34% increase in earnings. But we
expect the debt levels to remain flat in 2Q given dividend payout and continued
investment in new launches.
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