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IBREL reported 2Q earnings of Rs 394MM, largely inline with our estimates.
Core EBITDA margins (adj for power loss) surprised positively (35.6%)
which more than offset 120%Q/Q increase in interest cost (due one off items).
EBITDA margin improvement was likely on account of higher contribution
from higher margin (Gurgaon/Panvel) projects. Overall 1H revenue growth of
22% and EBITDA growth of 29% are largely tracking our estimates. These do
not include any contribution from lower Parel asset (IPIT results awaited).
Pre-sales and leasing surprise positively- 1] Booking of Rs 4.9B
(1.23msf) improved by ~30% Q/Q and were a positive surprise. On Y/Y
basis, booking were lower due to Lower Parel project contribution in 2Q
last year. Overall 1H bookings stand at Rs8.7B; 2] Incremental leasing of
0.18 msf done during the Q taking overall leased portfolio to ~2 msf (of the
total 3.3 msf). 3] Area under development increased by 1.67 msf Q/Q.
Approval issues have delayed two mega projects. This needs resolution
to foster confidence- IBREL seems to have missed its earlier launch target
for Worli project due to delay in obtaining requisite approvals. This has
been an industry wide issue given non clarity on car parking FSI policy.
Further, construction permits on Lower Parel residential have also not been
sanctioned as yet. While the co. is hopeful of a resolution on these issues
over next 3 months, we think that market may not impute value until
launch/construction progress happens. Apart from Worli (Bleu) project, key
launches this Q are likely to be in Mumbai (Golf City, Savroli) & Gurgaon.
B/S highlights- Net debt reduces and Customer advances show a sharp
uptick- Overall net debt for RE business has come down by Rs2.4B Q/Q
despite land acquisition of ~34 acres done during the Q. Customer liabilities
on IBREL (adjusted for power business) went up by Rs9.5B Q/Q indicating
that customer collections remained reasonably healthy. Loans and advances
increased sharply by Rs5.3B Q/Q likely on account of land payments.
Estimate changes- IBREL's reported Rev/ EBITDA growth is currently
tracking higher/inline with our estimates. Bookings run rate too has been
surprising us positively. However the company isn't as yet recognizing any
associate income from IPIT. Ex P/L contribution from IPIT, we do not see
any reason to cut our financial estimates. As regarding IPIT, we will review
its impact on earnings post management briefing.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IBREL reported 2Q earnings of Rs 394MM, largely inline with our estimates.
Core EBITDA margins (adj for power loss) surprised positively (35.6%)
which more than offset 120%Q/Q increase in interest cost (due one off items).
EBITDA margin improvement was likely on account of higher contribution
from higher margin (Gurgaon/Panvel) projects. Overall 1H revenue growth of
22% and EBITDA growth of 29% are largely tracking our estimates. These do
not include any contribution from lower Parel asset (IPIT results awaited).
Pre-sales and leasing surprise positively- 1] Booking of Rs 4.9B
(1.23msf) improved by ~30% Q/Q and were a positive surprise. On Y/Y
basis, booking were lower due to Lower Parel project contribution in 2Q
last year. Overall 1H bookings stand at Rs8.7B; 2] Incremental leasing of
0.18 msf done during the Q taking overall leased portfolio to ~2 msf (of the
total 3.3 msf). 3] Area under development increased by 1.67 msf Q/Q.
Approval issues have delayed two mega projects. This needs resolution
to foster confidence- IBREL seems to have missed its earlier launch target
for Worli project due to delay in obtaining requisite approvals. This has
been an industry wide issue given non clarity on car parking FSI policy.
Further, construction permits on Lower Parel residential have also not been
sanctioned as yet. While the co. is hopeful of a resolution on these issues
over next 3 months, we think that market may not impute value until
launch/construction progress happens. Apart from Worli (Bleu) project, key
launches this Q are likely to be in Mumbai (Golf City, Savroli) & Gurgaon.
B/S highlights- Net debt reduces and Customer advances show a sharp
uptick- Overall net debt for RE business has come down by Rs2.4B Q/Q
despite land acquisition of ~34 acres done during the Q. Customer liabilities
on IBREL (adjusted for power business) went up by Rs9.5B Q/Q indicating
that customer collections remained reasonably healthy. Loans and advances
increased sharply by Rs5.3B Q/Q likely on account of land payments.
Estimate changes- IBREL's reported Rev/ EBITDA growth is currently
tracking higher/inline with our estimates. Bookings run rate too has been
surprising us positively. However the company isn't as yet recognizing any
associate income from IPIT. Ex P/L contribution from IPIT, we do not see
any reason to cut our financial estimates. As regarding IPIT, we will review
its impact on earnings post management briefing.
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