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HDIL
2QFY11: Cash piled up, utilisation to follow; Buy
2QFY11 results. HDIL sold ~1m sqft of TDR at a healthy `3,000/sqft
and some FSI in 2QFY11. Margins improved, given better realisation on
TDR sales. Debtors grew as monies from 1QFY11 FSI sales in Vasai-
Virar are yet to flow in. We maintain Buy and reduce our Sep ’11e target
price to `350 from `375, mainly to adjust for the new warrants issue and
some project area changes.
Cash piled up. HDIL raised `11.57bn through a QIP and allotted
another 26m warrants to promoters (this wil infuse another `5.3bn
equity). With current debt of `41bn, net D/E stands at 0.3x. HDIL plans
utilizing 80% of the money raised via the QIP for execution of MIAL
projects and the remaining for non-MIAL projects.
MIAL project. The company indicated that shifting of families will
finally commence in Nov ’10 which, we believe, will be a sentiment
booster and provide some visibility for the 65 acres on MIAL land. The
previous quarter saw commencement of phase-2 of the project, with
construction beginning at Mulund (Central Mumbai Suburb).
Ambitious project launches. HDIL plans to launch 27m sqft of
residential space across Mumbai, MMR, Kochi and Pune in the next six
months. Of the current project offering, the company has sold ~`50bn
of stock with `9.82bn already received. Ex TDR and FSI sales, we
estimate HDIL to receive ~`12bn from sold projects in FY11.
Valuation and risks. We reduce our NAV to `388 and maintain 10%
discount for our Sep ’11e target of `350. At CMP, the stock trades at
1.2x FY11e PBV. Risks: Project concentration, regulatory changes.
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