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Research
Indiabulls Real Estate - 4QFY12 Results Update - Motilal Oswal
Posted On : 2012-05-02 21:40:19( TIMEZONE : IST )
Revenue booking healthy; New launches key to augment RoCE
- Indiabulls Real Estate (IBREL) has reported in-line results for 4QFY12. Growth in revenue booking was healthy at 22% QoQ, largely backed by stronger execution progress, as incremental sales during the quarter were muted. EBITDA declined 6% YoY to ~INR1.1b, while EBITDA margin declined to 24% from 29% in 3QFY12. Despite decline in EBITDA, PAT jumped 1.6x YoY due to lower tax rate.
- For the full year, revenue declined 3% to INR13.9b. However, EBITDA grew 20% to INR3.9b, driven by higher revenue contribution from Mumbai (Panvel) and Gurgaon projects.
- During 4QFY12, sales volume declined sharply, though sale of commercial space in Mumbai (Worli) drove up average realization and sales value QoQ. It sold 0.6msf (INR6.7b) v/s 0.9msf (INR4.5b) in 3QFY12. For the full year, sales were 3.5msf (INR19.8b) v/s 5.9msf (INR48.4b) in FY11, almost 60% de-growth in value terms.
- Leasing volume in IPIT commercial deteriorated QoQ to 0.06msf (v/s historical run rate of 0.18msf), taking the total area under lease at IFC and Indiabulls One to 2.21msf.
- Net debt was stable at INR18.6b, implying a net DER of 0.25x. However, considering the effective stake of IBREL in IPIT's debt, net debt works out to ~INR30.3b.
Valuation and view: Recent developments such as (a) continuous stake increase by promoters, also with the announcement of buyback, (b) warrant conversion at a high price, etc render positive sentiment for the stock, especially due to prolonged valuation discount compared to peers. However, (a) approval hurdles and regulatory headwinds, (b) slowdown in Central Mumbai market (IPIT and Worli projects account for ~45% of NAV), and (c) delay in new launches would remain key concerns. IBREL's continuous land acquisitions over the last couple of years have raised concerns over effective utilization of surplus cash. The monetization of these land parcels over FY13 would be a key factor to watch to augment RoCE. The stock trades at 0.4x FY13E BV, 14.6x FY13E EPS, and at ~40% discount to our NAV estimate. Buy.