Hold Unitech - Geojit BNP Paribas

- 2QFY13 revenue of Rs. 5.70 crore has been 14% lower y-y and up30% q-q. The figures are higher than market estimates.

- Core real estate revenue was down 15% y-y and up 36% q-q, with margin at 16% vs. 30% in 2QFY12 and 14% in 1QFY13.

- Net debt marginally increased by1.6 billion to INR55.6 billion primarily on account of currency fluctuations.

- On the operational front, sales volume was steady at 1.54m sq ft, vs. 1.51m sq ft in 1QFY13 and 2.78m sq ft in 2QFY13.

- Average realisation for the quarter was Rs.5,413/sq ft, up 17%% q-q and down 3% y-y.

- Delivery volume, at 0.6m sq ft, disappointed again. Management indicated that delivery volumes would pick up from 2H.

- The company has a debt repayment target of about Rs.12b for FY13.

- Its current cost of borrowing remained at 14.5%.

- The company still has to deliver about 11m sq ft of old projects (launched before March 2009) and 24.5m sq ft of new projects.

- Unitech management had stated earlier that it has resolved its dispute with Telenor.

- Subsequent to the settlement there is no contingent liability from its Telecom business.

- Dispute with Telenor was a major overhang on the stock.

- It seems that there is a strong case for a re-rating of the stock if Unitech is able to demonstrate operational improvements in its real estate business. The 'hold' rating is maintained.

Source : Equity Bulls

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