IBREL’s net cash generation of Rs1.5B for 4Q (Rs8.5B, or Rs22/share, for
FY13) was significantly ahead of reported PAT (of Rs0.5B). The company
achieved its highest-ever pre-sales of Rs30B in FY13 (vs Rs19B in FY12).
New launch momentum for IBREL continued to surprise positively, with the
launch of three high-value projects in the last three quarters, in addition to the
regular flow at its suburban mid-income projects. With IBREL becoming
decisively positive free cash flow, it concluded a buyback and announced a
dividend in FY13. Pre-sold projects (Rs83B) and unsold inventory under
construction (Rs 120B) give visibility on pre-tax cash flows of over Rs75B
over the next 4-5 years. Maintain Overweight with Mar-14 PT of Rs150.
Operating performance remains robust: IBREL achieved pre-sales of
Rs30B in FY13, up from Rs19B in FY12. Of the total Rs30B in pre-sales,
~Rs13B came from the Worli project and remainder from the suburban
portfolio. For FY14, IBREL guided to pre-sales of Rs36B (up 20% Y/Y),
driven by inventory sales in recent large luxury launches in South Mumbai
and suburban projects. Incremental office leasing was 0.1msf, taking leased
area to 2.5msf, with annualized rental income of Rs4.9B. IBREL expects
the remaining 0.8msf of un-leased area to be completely leased by Mar-14.
Cash flows far better than reported earnings: Cash flow for the quarter
was Rs1.5B (vs. reported PAT of Rs0.5B). This, coupled with inflow of
Rs1.4B from share sale by EWT, was used to pay IPL advances under the
demerger arrangement. For FY13, IBREL generated Rs8.5B in cash flow
(vs. FY13 PAT of Rs1.7B) which was used to fund the buyback (Rs2.7B),
funding EWT (net Rs2B), reducing IPL advances of Rs4B. Revenue
recognition for the year at Rs13B primarily came from the suburban
portfolio and lagged the pre-sale run rate (Rs30B for FY13). As the Worli
project hits recognition (expected in 3Q), earnings should see a substantial
scale-up over the next two years. Net debt was largely stable Y/Y.
Buyback + dividend: During the year, IBREL bought back 10% of the
stock and declared a Rs2/share dividend (53%) payout. Given it will likely
be FCF positive, increased payouts are likely in FY14.
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FY13) was significantly ahead of reported PAT (of Rs0.5B). The company
achieved its highest-ever pre-sales of Rs30B in FY13 (vs Rs19B in FY12).
New launch momentum for IBREL continued to surprise positively, with the
launch of three high-value projects in the last three quarters, in addition to the
regular flow at its suburban mid-income projects. With IBREL becoming
decisively positive free cash flow, it concluded a buyback and announced a
dividend in FY13. Pre-sold projects (Rs83B) and unsold inventory under
construction (Rs 120B) give visibility on pre-tax cash flows of over Rs75B
over the next 4-5 years. Maintain Overweight with Mar-14 PT of Rs150.
Operating performance remains robust: IBREL achieved pre-sales of
Rs30B in FY13, up from Rs19B in FY12. Of the total Rs30B in pre-sales,
~Rs13B came from the Worli project and remainder from the suburban
portfolio. For FY14, IBREL guided to pre-sales of Rs36B (up 20% Y/Y),
driven by inventory sales in recent large luxury launches in South Mumbai
and suburban projects. Incremental office leasing was 0.1msf, taking leased
area to 2.5msf, with annualized rental income of Rs4.9B. IBREL expects
the remaining 0.8msf of un-leased area to be completely leased by Mar-14.
Cash flows far better than reported earnings: Cash flow for the quarter
was Rs1.5B (vs. reported PAT of Rs0.5B). This, coupled with inflow of
Rs1.4B from share sale by EWT, was used to pay IPL advances under the
demerger arrangement. For FY13, IBREL generated Rs8.5B in cash flow
(vs. FY13 PAT of Rs1.7B) which was used to fund the buyback (Rs2.7B),
funding EWT (net Rs2B), reducing IPL advances of Rs4B. Revenue
recognition for the year at Rs13B primarily came from the suburban
portfolio and lagged the pre-sale run rate (Rs30B for FY13). As the Worli
project hits recognition (expected in 3Q), earnings should see a substantial
scale-up over the next two years. Net debt was largely stable Y/Y.
Buyback + dividend: During the year, IBREL bought back 10% of the
stock and declared a Rs2/share dividend (53%) payout. Given it will likely
be FCF positive, increased payouts are likely in FY14.
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