HDIL - 1QFY2013 Result Update - Angel Broking

Housing Development Infrastructure Ltd (HDIL)'s 1QFY2013 results were below our expectations on account of no transferable development rights (TDR) sales due to low inventory and all the sales coming in from the high margin floor space index (FSI) sale in Vasai- Virar (realization of Rs.1200/sqft). There were no FSI sales from the Guru Ashish project during the quarter. The management expects 1.5-2mn sqft of FSI sales per quarter going forward. The debt was reduced by 66cr during the quarter taking the debt to equity to 0.36x, down slightly qoq. The management highlighted focus on debt reduction by monetization of existing land and no new land purchase for the time being. The management also indicated towards the launch of its project in Pantnagar in Ghatkopar in a couple of months. We maintain a Buy on the stock.

Performance below expectations: Revenues decreased 60% yoy and 68% qoq to Rs.201cr (vs our estimate of Rs.552cr) on account of no TDR sales and all the sales coming in from the high margin FSI sale in Vasai- Virar. The EBITDA margin came in at 78.4%, up from 53% yoy owing to higher margin FSI sales. Consequently, the operating profit stood at Rs.158cr, down 40.7% yoy and 40.4% qoq. The tax rate for 1QFY2013 stood at 16.0% (26.6%); the PAT de-grew 50% yoy and 67% qoq to Rs.105cr.

Outlook and valuation: We believe that HDIL could outperform on the back of an improving approval scenario in the city and successful new launches which are expected over the coming months, which would further improve its balance sheet. At Rs.84, HDIL is trading at 0.3x and 0.28x on our FY2013E and FY2014E book value estimates, which seems cheap given the RoE profile of the company (FY2013E- 8.8%, FY2014E-9.4%). We maintain Buy on HDIL, with a target price of Rs.115.

Source : Equity Bulls

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