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Unitech (UNTE.BO)
Neutral Equity Research
Below expectations: Revenues miss on slower execution
What surprised us
Unitech reported 1QFY12 results with revenues of Rs5.96bn (-28% yoy),
and net income of Rs0.98bn (-45% yoy) vs. our expectation of Rs7.9bn and
Rs1.8bn, respectively. Revenues were below our expectations despite presales of 17.6mn sqft over the past 7 quarters. The net income miss was a
result of slower execution and negative operating leverage. Key
takeaways: (1) Unitech reported launches of 3.2mn sqft in 1QFY12 vs. an
average of 2.6mn sqft per quarter in FY11. (2) The area sold amounted to
1.5mn sqft in 1QFY12 vs. 2.5mn sqft in 1QFY11, and 1.8mn sqft in 4QFY11.
The value sold decreased to Rs10.2bn in 1QFY12 from Rs13bn in 1QFY11.
(3) EBIT margins for the real estate segment declined to 26% in 1QFY12
from 43% in 1QFY11, but margins have been volatile. (4) Gross debt
declined by about Rs2bn yoy to Rs56.5bn as at the end of June. (5)
Outstanding shares pledged by promoters were largely unchanged qoq.
What to do with the stock
We maintain our Neutral rating on the stock, but lower our 12-month
RNAV-based target price to Rs36 from Rs42, to factor in slower-thanexpected execution. Our target price is set at a 30% discount (unchanged)
to our March 12 based RNAV of Rs52. We also lower our FY12-FY14 EPS
estimates by 16%-19% to factor in slower-than-expected revenue
recognition and reduced asset sales estimates. Risks: Key upside risks to
our target price and investment view include: increased pace of execution
and clarity on telecom issues; downside risks include: delays in completion
of projects.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Unitech (UNTE.BO)
Neutral Equity Research
Below expectations: Revenues miss on slower execution
What surprised us
Unitech reported 1QFY12 results with revenues of Rs5.96bn (-28% yoy),
and net income of Rs0.98bn (-45% yoy) vs. our expectation of Rs7.9bn and
Rs1.8bn, respectively. Revenues were below our expectations despite presales of 17.6mn sqft over the past 7 quarters. The net income miss was a
result of slower execution and negative operating leverage. Key
takeaways: (1) Unitech reported launches of 3.2mn sqft in 1QFY12 vs. an
average of 2.6mn sqft per quarter in FY11. (2) The area sold amounted to
1.5mn sqft in 1QFY12 vs. 2.5mn sqft in 1QFY11, and 1.8mn sqft in 4QFY11.
The value sold decreased to Rs10.2bn in 1QFY12 from Rs13bn in 1QFY11.
(3) EBIT margins for the real estate segment declined to 26% in 1QFY12
from 43% in 1QFY11, but margins have been volatile. (4) Gross debt
declined by about Rs2bn yoy to Rs56.5bn as at the end of June. (5)
Outstanding shares pledged by promoters were largely unchanged qoq.
What to do with the stock
We maintain our Neutral rating on the stock, but lower our 12-month
RNAV-based target price to Rs36 from Rs42, to factor in slower-thanexpected execution. Our target price is set at a 30% discount (unchanged)
to our March 12 based RNAV of Rs52. We also lower our FY12-FY14 EPS
estimates by 16%-19% to factor in slower-than-expected revenue
recognition and reduced asset sales estimates. Risks: Key upside risks to
our target price and investment view include: increased pace of execution
and clarity on telecom issues; downside risks include: delays in completion
of projects.
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