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Housing Development &
Infrastructure (HDIL)
Property
Triggers get more elusive. 2QFY12 was weak with revenues (Rs4.4 bn, -14% qoq)
and EBITDA (Rs2.3 bn, -21% qoq) lower than expected. With (1) weak TDR sales in
2QFY12, (2) no launches in 2QFY12 and (2) possible delay in deliveries, near-term
triggers seem unlikely. We reduce our FY2012E revenues and net profit estimates by
11%/14% but the stock is trading at 0.4X current BV with FY2012E ROE of 11%. We
retain BUY with a revised target price of Rs140/share (Rs150/share earlier).
Revenues and EBITDA below expectation due to lower-than-expected TDR sales
HDIL reported revenues of Rs4.4 bn (-14% qoq, +15% yoy, 15% below expectation) and EBITDA
of Rs2.3 bn (-21% qoq, -11% yoy) as TDR volumes declined to 0.27 mn sq. ft (at Rs 2,593/sq. ft)
versus 0.65 mn sq. ft in 1QFY12 (at Rs 2,640/sq. ft) due to slow pace of construction in the
monsoon season. The revenue for the quarter consists of 67% from FSI sales (from Guru Ashish
Constructions which is a 100% subsidiary), 17% from Industrial Park in Virar (the company has
given part possession) ad rest from TDR sales. Overall HDIL has sold Rs9 bn worth of FSI in Guru
Ashish of which Rs2.9 bn has been recognized in 2QFY12 and the balance will come in within 6-8
months. PAT came it at Rs1.5 bn (-22% qoq, -24% yoy) as FSI sales and revenue recognition in
Virar attracted the full tax rate and PAT margins consequently declined 200 bps qoq.
A sluggish Mumbai market impacts sales though October showed promise
HDIL sales were impacted due to a sluggish market and the company sold less than 0.5 mn sq. ft
which is similar to 1QFY12 and 3QFY12 could see a bounce as the company has already sold 35-
40 apartments in October. HDIL has increased prices by 15% over the past month and expects
prices to go up further due to supply constraints as approvals remain elusive.
Update on MIAL
150-175 families have been shifted in 2QFY12 to the Kurla Premier compound and the process
continues to remain slow due to lack of clarity on eligibility norms. The location can handle 22,000
families and HDIL has handed over possession of 50% of the area to MMRDA. Phases 2 and 3 are
getting delayed as the company is awaiting final clearances on the land and clarity on the eligibility
criteria.
Retain BUY with a revised target price of Rs140/share (Rs150/share earlier)
We assume (1) WACC of 18% (highest end of our band) given the higher risk in SRS projects, (2)
reduced TDR sale expectation in FY2012E to 2.5 mn sq. ft from 4.4 mn sq. ft earlier and continue
to assume that only Phases I and II will be completed and sale of the free sale commercial property
will be delayed and (3) effective tax rate of 25% versus 16% in FY2011. We cut revenue estimates
for FY2012/14E by 11%/1% and EBITDA estimates for FY2012/13/14E by 31%/24%/19%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Housing Development &
Infrastructure (HDIL)
Property
Triggers get more elusive. 2QFY12 was weak with revenues (Rs4.4 bn, -14% qoq)
and EBITDA (Rs2.3 bn, -21% qoq) lower than expected. With (1) weak TDR sales in
2QFY12, (2) no launches in 2QFY12 and (2) possible delay in deliveries, near-term
triggers seem unlikely. We reduce our FY2012E revenues and net profit estimates by
11%/14% but the stock is trading at 0.4X current BV with FY2012E ROE of 11%. We
retain BUY with a revised target price of Rs140/share (Rs150/share earlier).
Revenues and EBITDA below expectation due to lower-than-expected TDR sales
HDIL reported revenues of Rs4.4 bn (-14% qoq, +15% yoy, 15% below expectation) and EBITDA
of Rs2.3 bn (-21% qoq, -11% yoy) as TDR volumes declined to 0.27 mn sq. ft (at Rs 2,593/sq. ft)
versus 0.65 mn sq. ft in 1QFY12 (at Rs 2,640/sq. ft) due to slow pace of construction in the
monsoon season. The revenue for the quarter consists of 67% from FSI sales (from Guru Ashish
Constructions which is a 100% subsidiary), 17% from Industrial Park in Virar (the company has
given part possession) ad rest from TDR sales. Overall HDIL has sold Rs9 bn worth of FSI in Guru
Ashish of which Rs2.9 bn has been recognized in 2QFY12 and the balance will come in within 6-8
months. PAT came it at Rs1.5 bn (-22% qoq, -24% yoy) as FSI sales and revenue recognition in
Virar attracted the full tax rate and PAT margins consequently declined 200 bps qoq.
A sluggish Mumbai market impacts sales though October showed promise
HDIL sales were impacted due to a sluggish market and the company sold less than 0.5 mn sq. ft
which is similar to 1QFY12 and 3QFY12 could see a bounce as the company has already sold 35-
40 apartments in October. HDIL has increased prices by 15% over the past month and expects
prices to go up further due to supply constraints as approvals remain elusive.
Update on MIAL
150-175 families have been shifted in 2QFY12 to the Kurla Premier compound and the process
continues to remain slow due to lack of clarity on eligibility norms. The location can handle 22,000
families and HDIL has handed over possession of 50% of the area to MMRDA. Phases 2 and 3 are
getting delayed as the company is awaiting final clearances on the land and clarity on the eligibility
criteria.
Retain BUY with a revised target price of Rs140/share (Rs150/share earlier)
We assume (1) WACC of 18% (highest end of our band) given the higher risk in SRS projects, (2)
reduced TDR sale expectation in FY2012E to 2.5 mn sq. ft from 4.4 mn sq. ft earlier and continue
to assume that only Phases I and II will be completed and sale of the free sale commercial property
will be delayed and (3) effective tax rate of 25% versus 16% in FY2011. We cut revenue estimates
for FY2012/14E by 11%/1% and EBITDA estimates for FY2012/13/14E by 31%/24%/19%.
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