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Puravankara Projects (PVKP)
Property
Downgrade as stock soars but sales remain sluggish. PVKP’s sales declined 43%
yoy and 22% qoq despite the broad Bengaluru market reporting healthy sales. 2QFY12
financials were in line with revenues and EBITDA of Rs2 bn (+28% yoy, +4% qoq) and
Rs0.5 bn (+21% yoy, +3% qoq), respectively, though with 1HFY12 sales of 1.3 mn sq.
ft, it is less likely that PVKP will meet its FY2012E target of 3.5 mn sq. ft. PVKP stock has
gone up 22% since low in August 2011 and noting marginal upside, we downgrade to
REDUCE with an unchanged target price of Rs80/share.
Largely in-line results
PVKP reported in-line revenues of Rs2 bn (+28% yoy, +4% qoq and 1% below KIE estimates) and
in-line EBITDA of Rs467 mn (+21% yoy, +3% qoq and2% below KIE estimate). PAT, however, at
Rs265 mn (-26% yoy, -15% qoq) was below expectation by 28% due to a much lower share of
profit from associates. EBITDA margin at 23.6% (versus our expectation of 23.9%) was 32 bps
below 1QFY12 margin and 152 bps below 2QFY11 margin. The effective tax at 33.5% for 1HFY12
is now in a more sustainable range versus 11.2% in 1HFY11 due to a lack of 80-IB projects.
Sales remain flattish qoq but decline yoy due to high interest rates and lack of new launches
Puravankara (along with Provident) sold 0.6 mn sq. ft in 2QFY12 versus 0.7 mn sq. ft in 1QFY12
and 1 mn sq. ft in 2QFY11, indicating that sales continue to remain weak due to high interest
rates and a lack of new launches. Sales in Provident remained flat qoq at 0.1 mn sq. ft and
declined 66% yoy while sales in Puravankara at 0.4 mn sq. ft declined 28% qoq and 27% yoy.
Key contributors to sales in PVKP are Purva Winderemere (0.16 mn sq. ft) and Purva Bluemont
(0.08 mn sq. ft). PVKP has now sold 1.3 mn sq. ft in 1HFY12 and it seems unlikely that it will be
able to meet its sales guidance of 3.5 mn sq. ft in FY2012E unless it picks up the pace of launches.
Sales realizations in Puravankara at Rs 3,736/sq. ft declined 5% qoq and improved19% yoy while
overall realizations at Rs3,464/sq. ft declined by 6% qoq due to lack of sales in higher value
projects but increased 27% yoy. PVKP currently has 20 mn sq. ft of launched area under execution
comprising of 15 residential projects (14.9 mn sq. ft), two affordable housing projects (4.5 mn sq.
ft) and three commercial projects (0.5 mn sq. ft).
PVKP has not launched any projects in 2QFY12, possibly due to weak market sentiments and has
lined up 2 launches in 3QFY12 – (1) a luxury project in Bengaluru in CV Raman Nagar totaling 1.1
mn sq. ft under Puravankara brand from which it expects to realize Rs5 bn and (2) 0.65 mn sq. ft
of launch under Provident brand. In total, PVKP is expecting to get all approvals to launch 4.6 mn
sq. ft saleable area in Puravankara and 11.3 mn sq. ft in Provident in FY2012 and another 2.1 mn
sq. ft of saleable area in Puravankara and 0.1 mn sq. ft in Provident in 1HFY13. PVKP’s land bank
stands at 116.4 mn sq. ft of developable area which is stable qoq.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Puravankara Projects (PVKP)
Property
Downgrade as stock soars but sales remain sluggish. PVKP’s sales declined 43%
yoy and 22% qoq despite the broad Bengaluru market reporting healthy sales. 2QFY12
financials were in line with revenues and EBITDA of Rs2 bn (+28% yoy, +4% qoq) and
Rs0.5 bn (+21% yoy, +3% qoq), respectively, though with 1HFY12 sales of 1.3 mn sq.
ft, it is less likely that PVKP will meet its FY2012E target of 3.5 mn sq. ft. PVKP stock has
gone up 22% since low in August 2011 and noting marginal upside, we downgrade to
REDUCE with an unchanged target price of Rs80/share.
Largely in-line results
PVKP reported in-line revenues of Rs2 bn (+28% yoy, +4% qoq and 1% below KIE estimates) and
in-line EBITDA of Rs467 mn (+21% yoy, +3% qoq and2% below KIE estimate). PAT, however, at
Rs265 mn (-26% yoy, -15% qoq) was below expectation by 28% due to a much lower share of
profit from associates. EBITDA margin at 23.6% (versus our expectation of 23.9%) was 32 bps
below 1QFY12 margin and 152 bps below 2QFY11 margin. The effective tax at 33.5% for 1HFY12
is now in a more sustainable range versus 11.2% in 1HFY11 due to a lack of 80-IB projects.
Sales remain flattish qoq but decline yoy due to high interest rates and lack of new launches
Puravankara (along with Provident) sold 0.6 mn sq. ft in 2QFY12 versus 0.7 mn sq. ft in 1QFY12
and 1 mn sq. ft in 2QFY11, indicating that sales continue to remain weak due to high interest
rates and a lack of new launches. Sales in Provident remained flat qoq at 0.1 mn sq. ft and
declined 66% yoy while sales in Puravankara at 0.4 mn sq. ft declined 28% qoq and 27% yoy.
Key contributors to sales in PVKP are Purva Winderemere (0.16 mn sq. ft) and Purva Bluemont
(0.08 mn sq. ft). PVKP has now sold 1.3 mn sq. ft in 1HFY12 and it seems unlikely that it will be
able to meet its sales guidance of 3.5 mn sq. ft in FY2012E unless it picks up the pace of launches.
Sales realizations in Puravankara at Rs 3,736/sq. ft declined 5% qoq and improved19% yoy while
overall realizations at Rs3,464/sq. ft declined by 6% qoq due to lack of sales in higher value
projects but increased 27% yoy. PVKP currently has 20 mn sq. ft of launched area under execution
comprising of 15 residential projects (14.9 mn sq. ft), two affordable housing projects (4.5 mn sq.
ft) and three commercial projects (0.5 mn sq. ft).
PVKP has not launched any projects in 2QFY12, possibly due to weak market sentiments and has
lined up 2 launches in 3QFY12 – (1) a luxury project in Bengaluru in CV Raman Nagar totaling 1.1
mn sq. ft under Puravankara brand from which it expects to realize Rs5 bn and (2) 0.65 mn sq. ft
of launch under Provident brand. In total, PVKP is expecting to get all approvals to launch 4.6 mn
sq. ft saleable area in Puravankara and 11.3 mn sq. ft in Provident in FY2012 and another 2.1 mn
sq. ft of saleable area in Puravankara and 0.1 mn sq. ft in Provident in 1HFY13. PVKP’s land bank
stands at 116.4 mn sq. ft of developable area which is stable qoq.
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