Anant Raj Industries - 4QFY12 Results Update - Motilal Oswal

Anant Raj's 4QFY12 results were impacted due to reversal of INR1.15b revenue from Kapasera project which was discontinued in 4QFY12, due to unfavorable verdict Delhi Municipal Authority notification with regard to certain permissions.

- Revenue was up 3% YoY to INR654m, EBITDA down 59% YoY to INR187m, and PAT down 63% YoY to INR112m. However, adjusting for the reversal, revenue booking has been healthy at INR1.8b, 2x QoQ. Rental income from commercial / hotel projects stood at INR264m v/s INR232m in 3Q. Incremental rental came from higher contribution from Kirti Nagar mall and Hotel Tricolor which commenced operations in Jan-12.

- Ongoing projects witnessed strong QoQ growth in sales at 0.7msf (INR3.6b) as against 0.4msf (INR0.9b), led by good response in Golf Course Road project. FY12 sales value was up 30% YoY to INR7b.

- Net debt stood at INR10.5b (marginally up QoQ); net DER was 0.27x. The management targets ~INR4-5b debt reduction over next 12-18 months, banking on a strong cash flow from Golf Course Road project.

- ARCP has a quality land bank and wide presence across asset classes enabling multiple revenue streams and relatively healthy liquidity. With ~13msf (~INR8.4b) of land acquisition during FY11 at an attractive cost, the company is strongly placed to unlock significant value through its monetization.

- Despite strong sales over FY11-12, the lower collections (~INR1.1b out of INR8b) raises concern over quality of sales. However, initial response to Golf Course Road project is a positive. With no major launch plan over FY13-14, we expect success of Golf Course project would be the deciding factor for its operating performance.

- Major challenges: (1) Subdued leasing momentum in its commercial projects such as Manesar IT park, and (2) Slower execution pace till date.

- The stock trades at 9.5x FY13E EPS of INR4.8, 0.3x FY13E BV and at ~ 58% discount to our NAV of INR110. Maintain Buy.

Source : Equity Bulls

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