IBREL’s 1Q earnings (Rs0.7B, +92% Y/Y) came in line with expectations
primarily coming from suburban portfolio. Net cash generation (Rs3.8B for
1Q) remained solid and is significantly ahead of the reported PAT. Operating
performance has also been impressive. In terms of pre sales (Rs15.9B in Q1),
IBREL’s performance has been much better than peers and it has already
achieved ~35% of its full year pre sale guidance in Jun-Q. Leasing too has
gained traction with 0.5msf of incremental leasing done in Q1, taking
occupancy of lease portfolio to 90%. Over the next 12 months, as Worli
project hits the revenue recognition threshold, earnings should also see a
substantial pick up bridging the gap to cash flows. Maintain OW.
Operating performance is impressive- Jun-Q pre sales at Rs15.9B
(IBREL stake at ~Rs12B) was fairly strong, with 65% contribution
coming from luxury projects (Worli, Lower Parel) and remainder from
suburban portfolio. Re-launch of Lower Parel projects have seen good
response. Overall, IBREL has already achieved 35% of its full year pre
sale guidance of Rs36B in Jun-Q. Of the total Rs36B FY14 target,
IBREL is looking at Rs20B of pre sales from suburban portfolio and
remainder from luxury projects. Incremental leasing at 0.5msf in JunQ is much higher than 0.2msf quarterly run rate over the last 2 years.
This takes total leased area to 3msf (90% occupancy) which should yield
stabilized annual rental income of ~Rs5B (IBREL stake- 50%) by FY14
end. With this, IBREL now has only 0.3msf area yet to be leased.
Cash generation remains strong–Net Debt came down by Rs1.3B Q/Q
to Rs23.3B (including OCDs/CCDs) in Jun-Q. Further, IBREL paid
Rs2.5B for IPL advances in 1Q, bringing down the total payable (for
power de-merger) to Rs2B. This implies net cash generation of Rs3.8B
during the Q. IBREL also announced an interim dividend of Rs1/share in
1Q, given the cash generation in the business.
Additional buyback likely- Given strong cash generation in the
business, increased dividend payouts are likely ahead. Further, company
might also look at additional share buyback in FY14 (IBREL also did a
10% buy back last year). Promoters have also continued to increase their
stake in the company from open market. Current promoter stake stands at
~47% levels vs. 44% in Mar-Q
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primarily coming from suburban portfolio. Net cash generation (Rs3.8B for
1Q) remained solid and is significantly ahead of the reported PAT. Operating
performance has also been impressive. In terms of pre sales (Rs15.9B in Q1),
IBREL’s performance has been much better than peers and it has already
achieved ~35% of its full year pre sale guidance in Jun-Q. Leasing too has
gained traction with 0.5msf of incremental leasing done in Q1, taking
occupancy of lease portfolio to 90%. Over the next 12 months, as Worli
project hits the revenue recognition threshold, earnings should also see a
substantial pick up bridging the gap to cash flows. Maintain OW.
Operating performance is impressive- Jun-Q pre sales at Rs15.9B
(IBREL stake at ~Rs12B) was fairly strong, with 65% contribution
coming from luxury projects (Worli, Lower Parel) and remainder from
suburban portfolio. Re-launch of Lower Parel projects have seen good
response. Overall, IBREL has already achieved 35% of its full year pre
sale guidance of Rs36B in Jun-Q. Of the total Rs36B FY14 target,
IBREL is looking at Rs20B of pre sales from suburban portfolio and
remainder from luxury projects. Incremental leasing at 0.5msf in JunQ is much higher than 0.2msf quarterly run rate over the last 2 years.
This takes total leased area to 3msf (90% occupancy) which should yield
stabilized annual rental income of ~Rs5B (IBREL stake- 50%) by FY14
end. With this, IBREL now has only 0.3msf area yet to be leased.
Cash generation remains strong–Net Debt came down by Rs1.3B Q/Q
to Rs23.3B (including OCDs/CCDs) in Jun-Q. Further, IBREL paid
Rs2.5B for IPL advances in 1Q, bringing down the total payable (for
power de-merger) to Rs2B. This implies net cash generation of Rs3.8B
during the Q. IBREL also announced an interim dividend of Rs1/share in
1Q, given the cash generation in the business.
Additional buyback likely- Given strong cash generation in the
business, increased dividend payouts are likely ahead. Further, company
might also look at additional share buyback in FY14 (IBREL also did a
10% buy back last year). Promoters have also continued to increase their
stake in the company from open market. Current promoter stake stands at
~47% levels vs. 44% in Mar-Q
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