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Research
Mahindra Lifespace Developers - 1QFY2014 Result Update - Angel Broking
Posted On : 2013-07-28 09:40:17( TIMEZONE : IST )
For 1QFY2014, Mahindra Lifespace Developers (MLIFE) posted a disappointing set of numbers which were below consensus estimates, both on the revenue and profitability fronts. MLIFE's standalone revenue reported a decline of 35.6% yoy to Rs.67cr in 1QFY2014; which was lower than the consensus estimate of Rs.104.4cr. The standalone EBITDA declined by 71% yoy to Rs.9cr, owing to lower-than-expected revenue recognition and increase in staff cost during the quarter. On the earnings front, the company's PAT decreased by 46.2% yoy to Rs.16cr (consensus estimate was Rs.22.8cr). On a consolidated level, MLIFE reported a revenue of Rs.176.1cr and PAT of Rs.21.8cr, suggesting a profit for its subsidiaries at the net level. We recommend an Accumulate rating on the stock.
Sales expected to pick up in forthcoming quarters: MLIFE launched three existing project (a) Ashvita Ph-III (Hyderabad), (b) Bloomdale IIA (Nagpur) and (c) Iris Court Ph-IIIA (MWC Chennai) during the quarter. Further, the company sold 0.16mn sqft (new sales; real estate business) for a total transaction value of Rs.70cr, implying a realization of ~Rs.4,375/sqft and has also added three new customers in 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 P/BV of 1.3x and 1.2x our FY2014 and FY2015 estimate. We value MLIFE on a SOTP basis and slightly adjust our NAV to Rs.537/share, and apply a 10% discount to our SOTP value to arrive at a target price of Rs.483, suggesting an 7% upside from the current levels. We recommend an Accumulate rating on the stock.
