Mahindra Lifespaces Developers - 4QFY2013 Result Update - Angel Broking

Mahindra Lifespaces Developers (MLIFE) reported a weak set of numbers for 4QFY2013, mainly due to delay in execution in Aura and Splendor Ph-II projects. MLIFE reported standalone revenues of Rs. 102cr in 4QFY2013, indicating a decline of 27% yoy against consensus estimate of Rs. 120cr. The standalone EBITDA decreased by 46.1% yoy to Rs. 17cr in 4QFY2013, owing to lower-than-expected revenue recognition. The company's PAT reported a decline of 27.7% yoy to Rs. 23cr. On a consolidated level, MLIFE reported a revenue of Rs. 362cr and PAT of Rs. 82cr in 4QFY2013, suggesting a profit for its subsidiaries at the net level. We recommend Buy rating on the stock.

Sales remain subdued, expect strong pick up in following quarters: MLIFE launched its second phase of project Ashvita (Hyderabad) and Aqualily C (Chennai) during the quarter. Further, the company sold 0.38mn sqft (new sales; real estate business) for a total transaction value of Rs. 151cr, implying a realization of ~Rs. 3,974/sqft and sold 91 acres in its Chennai MWC and Jaipur MWC. Going forward, we expect strong sales numbers along with improving realizations in the coming quarters on the back of sharp pick up in approvals and new launches anticipated in the current financial year.

Outlook and valuation: We remain positive on MLIFE given its diversified geographic exposure in terms of ongoing and forthcoming real estate projects. We expect strong sales numbers over the coming quarters, following new project launches in Pune, Chennai and Mumbai, along with robust execution. The stock is currently trading at 1.1x and 1.0x on our FY2014E and FY2015E book value compared to its 3 year average of 1.3x. We value MLIFE on a SOTP basis and slightly adjust our NAV to Rs. 496/share, and apply a 10% discount to our SOTP value to arrive at a target price of Rs. 446, suggesting an 18% upside from the current levels. We recommend a Buy rating on the stock.

Source : Equity Bulls

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