| Indiabulls Group Investor Meet Takeaways | ||
Indiabulls Group promoters held an investor meet last Friday, and detailed the outlook and strategy for the key group companies. In summary, the focus remains on paying back via dividends a significant portion (40-50% sustainable basis) of the earnings generated from the business whilst maintaining a high credit rating and no foreseeable dilution in any of the businesses. Below are the main takeaways of the key businesses.
· Real Estate (IBREL, OW) - Expect strong (50%+) earnings growth near term driven by recognition of high end Worli project. The company has become free cash. Incremental usage of cash hereon will be in paying dividends (F14 50% payout) and new land acquisitions. Overall the company remains comfortable on debt levels hereon. Longer term, management indicated that it will look to increase IBREL's stake in Singapore listed IPIT (Rental + residential mixed used development in Lower Parel) so as to consolidate it into IBREL (will be earnings accretive, in our view).
· Financials (IHFL, Not Covered)- The business comprising Mortgages, Loan Against Property and Project loans, has now stabilized at ROE of ~25%+ driven by stable spreads and low loan losses. Management expects 25% growth in the business hereon. As per Crisil’s rating for the company's loan pools (over F08-13) most of the loans have shown low level of delinquencies.
· Power (IBPOW, Not Covered) - First phase of the Nashik and Amravati Power plants are near stabilization (2700 MW in total, 800MW operational as of now). Focus right now is towards getting a pass through for the imported coal in their PPAs (precedent set in other SEBs). If that can be achieved then management believes it can get a 10-12% IRR on their business; correspondingly once the annuity starts, the company will dividend out the cash flows out.
Table 1: Indiabulls Group - FY14 Key Financials
Rs M
|
Indiabulls Group
|
Indiabulls Housing Finance
|
Indiabulls Real Estate
|
Indiabulls Power
|
Indiabulls Securities
| |
Revenues
|
87,480
|
59,610
|
18000
|
2724
|
3,040
| |
PAT
|
18,090
|
15,690
|
2030
|
NA
|
1,020
| |
Net worth
|
197,040
|
57,090
|
68,739
|
54,391
|
2,366
| |
Dividend Payout
|
11,740
|
9,660
|
1140
|
NA
|
940
| |
Dividend Payout ratio
|
65%
|
62%
|
56%
|
NA
|
92%
| |
Source: Company presentation
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