Maintain 'hold' on Unitech - TP Rs.33 - Geojit BNP Paribas Financial Services

- Company reported better than expected performance in 3QFY13.

- Revenue at Rs.680 crore increased 24% yoy and 18% qoq and higher than market estimates.

- Core real estate revenue was up 26% yoy and 19%qoq and the operating margin came in at 18% versus 27% in 3QFY12 and 16% in 2QFY13.

- Net debt was stable at Rs.5420 crore.

- On the operational front, sales volume was steady at 1.4 million sq ft versus 1.5 million sq ft in 2QFY13 and 1.7 million sq ft in 3QFY12.

- Average realization for the quarter was Rs.4986/ sq ft, down 8% qoq and 10% yoy.

- Delivery volume at 0.6 million sq ft was disappointing. However, this is expected to pick up over the next two to three quarters on the back of improved execution.

- Cost of debt remained constant at 14.5%.

- Unitech had 20,000 workers at the end of December 2012 compared to about 10,000-11,000 in early 2012. The company expects to have 25,000 workers by the end of Mar'13.

- Despite this focus on real estate, continued negative news flow about the promoter related to the 2G case is expected to create an overhang on the stock until that case is resolved.

- Hence, 'hold' rating is maintained despite better than expected quarterly performance.

- Key risks to TP include slow execution and asymmetric risk arising out of the 2G case.

Source : Equity Bulls

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