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While IBREL in 2Q12 reported 11% and 26% yoy revenue and EBITDA growth respectively,
higher interest cost (one time) led to 23% yoy decline in PAT. Sequential improvement in sales
run-rate (given the current slowdown) and marginal improvement in net debt were positives
2Q12: Higher interest cost (one-time) leads to lower PAT
Indiabulls Real estate (IBREL) reported 2Q12 revenues of Rs3.3bn (+11% yoy). The
company’s EBITDA came in at Rs1bn (26% yoy) with EBITDA margins at 30.9% (vs.27.1% in
2Q11) driven by significant revenue recognition from its higher margin Panvel project.
Company expects the future EBITDA margins to be in range of 25-30%.
Higher interest expense of Rs724m (vs Rs116m in 2Q11) was disappointing which the
company attributes as one time cost (on account of the exit given to a partner with interest in
its Chandigarh project, as the project faces litigation on title issues). Tax rate came in at
35.7% (vs. 43.8% in 2Q11). Thus PAT declined 23% yoy to Rs394mn.
Sequential improvement in sales run-rate - a positive
IBREL sold an area of 1.23msf amounting to sales of Rs4.9bn during the quarter with sales
largely coming from its projects in Panvel (Indiabulls Green) and Gurgaon (Enigma). This
compares to sale of 1.84 msf with sales value of Rs3.1bn in 2Q11 and 0.78msf with sales
value of Rs3.8bn in 1Q12. Given the current headwinds in the Mumbai region, we believe the
company’s sequential increase in sales during the quarter was a positive.
The company today launched office complex (sale model) at Rs 30,000/sf in its Worli project
to utilise higher FSI (floor space Index) of 2.66x in addition to the earlier residential launch of
Project Bleu at FSI of 1.33x
During the quarter, the company leased 0.18msf of area (0.11msf in 2Q11 and 0.17msf in
1Q12), with total leased area now at 1.96msf.
Area under construction as of 2Q12 stands at 17.48msf from 17.17msf in 1Q12. Area under
development as of 2Q12 stands at 64.32msf from 62.64msf in 1Q12.In the quarter, IBREL
acquired additional land of 34.33 acres increasing the future land bank area to 576acres.
Balance sheet sees marginal improvement
Net debt on a consolidated basis witnesses sequential reduction of Rs1.3bn and currently
stands at Rs21.7bn. Net debt for Indiabulls Real estate (ex power) witnessed a sequential
decline of Rs2.4bn and stands at Rs17.3bn.
Net working capital (on a consolidated basis) reduced 22% from Rs45.7bn in FY11 to
Rs35.4bn as on 2Q12 (and reduced 30% from Rs50.7bn in 1Q12) due to 92% increase in
liabilities (led by increase in Letters of Credit for Indiabulls Power) to Rs 48bn from Rs 25bn in
FY11 (and increased 66% from Rs 28.9bn in 1Q12). However sundry debtors increased by
34% over FY11 and 6% over 1Q12 and stands at Rs7.8bn. Inventory even witnessed a
growth of 8% over FY11 and 2% over 1Q12 and stands at Rs51.1bn .
Update on amalgamation of IBPOW and IIDL
The amalgamation between Indiabulls Power (IBPOW) and Indiabulls Infrastructure
Development Limited (IIDL), a subsidiary of Indiabulls Real Estate Limited has been approved
by the Board of Directors on 5th August 2011.
As per Company, the amalgamation scheme has even received clearance from NSE and
BSE while the process of seeking the approval of the court including the approval from the
shareholders and creditors of the Company, is being initiated.
Maintain buy on attractive valuations
We maintain Buy with SOTP based target price of Rs120 by valuing: 1) Rs82/sh for real
estate (post a 15% discount to GAV), and 2) Rs32/share for the 58.6% stake in IBPOW (post
a 20% holding company discount).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
While IBREL in 2Q12 reported 11% and 26% yoy revenue and EBITDA growth respectively,
higher interest cost (one time) led to 23% yoy decline in PAT. Sequential improvement in sales
run-rate (given the current slowdown) and marginal improvement in net debt were positives
2Q12: Higher interest cost (one-time) leads to lower PAT
Indiabulls Real estate (IBREL) reported 2Q12 revenues of Rs3.3bn (+11% yoy). The
company’s EBITDA came in at Rs1bn (26% yoy) with EBITDA margins at 30.9% (vs.27.1% in
2Q11) driven by significant revenue recognition from its higher margin Panvel project.
Company expects the future EBITDA margins to be in range of 25-30%.
Higher interest expense of Rs724m (vs Rs116m in 2Q11) was disappointing which the
company attributes as one time cost (on account of the exit given to a partner with interest in
its Chandigarh project, as the project faces litigation on title issues). Tax rate came in at
35.7% (vs. 43.8% in 2Q11). Thus PAT declined 23% yoy to Rs394mn.
Sequential improvement in sales run-rate - a positive
IBREL sold an area of 1.23msf amounting to sales of Rs4.9bn during the quarter with sales
largely coming from its projects in Panvel (Indiabulls Green) and Gurgaon (Enigma). This
compares to sale of 1.84 msf with sales value of Rs3.1bn in 2Q11 and 0.78msf with sales
value of Rs3.8bn in 1Q12. Given the current headwinds in the Mumbai region, we believe the
company’s sequential increase in sales during the quarter was a positive.
The company today launched office complex (sale model) at Rs 30,000/sf in its Worli project
to utilise higher FSI (floor space Index) of 2.66x in addition to the earlier residential launch of
Project Bleu at FSI of 1.33x
During the quarter, the company leased 0.18msf of area (0.11msf in 2Q11 and 0.17msf in
1Q12), with total leased area now at 1.96msf.
Area under construction as of 2Q12 stands at 17.48msf from 17.17msf in 1Q12. Area under
development as of 2Q12 stands at 64.32msf from 62.64msf in 1Q12.In the quarter, IBREL
acquired additional land of 34.33 acres increasing the future land bank area to 576acres.
Balance sheet sees marginal improvement
Net debt on a consolidated basis witnesses sequential reduction of Rs1.3bn and currently
stands at Rs21.7bn. Net debt for Indiabulls Real estate (ex power) witnessed a sequential
decline of Rs2.4bn and stands at Rs17.3bn.
Net working capital (on a consolidated basis) reduced 22% from Rs45.7bn in FY11 to
Rs35.4bn as on 2Q12 (and reduced 30% from Rs50.7bn in 1Q12) due to 92% increase in
liabilities (led by increase in Letters of Credit for Indiabulls Power) to Rs 48bn from Rs 25bn in
FY11 (and increased 66% from Rs 28.9bn in 1Q12). However sundry debtors increased by
34% over FY11 and 6% over 1Q12 and stands at Rs7.8bn. Inventory even witnessed a
growth of 8% over FY11 and 2% over 1Q12 and stands at Rs51.1bn .
Update on amalgamation of IBPOW and IIDL
The amalgamation between Indiabulls Power (IBPOW) and Indiabulls Infrastructure
Development Limited (IIDL), a subsidiary of Indiabulls Real Estate Limited has been approved
by the Board of Directors on 5th August 2011.
As per Company, the amalgamation scheme has even received clearance from NSE and
BSE while the process of seeking the approval of the court including the approval from the
shareholders and creditors of the Company, is being initiated.
Maintain buy on attractive valuations
We maintain Buy with SOTP based target price of Rs120 by valuing: 1) Rs82/sh for real
estate (post a 15% discount to GAV), and 2) Rs32/share for the 58.6% stake in IBPOW (post
a 20% holding company discount).
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