Buy Indiabulls Real Estate Ltd - Motilal Oswal

Indiabulls Real Estate (IBREL IN; Mkt Cap USD1.1b, CMP Rs123, Buy)

Indiabulls Real Estate (IBREL) reported better than expected results for 3QFY11. Revenue grew ~967% YoY to Rs4b.

Net profit jumped ~2,662% YoY to Rs766m (v/s Rs28m in 3QFY10 and Rs509m in 2QFY11). EBITDA increased to Rs1.2b v/s a loss of Rs322m in 3QFY10.

Average realization has declined to Rs3,773/sf (v/s Rs17,216/sf in 2QFY11). This indicates a fall in sales momentum in super luxury projects in central Mumbai.

Strong volume implies steady demand in mid-income projects across other micro-markets.

IBREL will transfer the power business, comprising of 59% stake in Indiabulls Power Indiabulls Infrastructure & Power (IIPL), a 100% subsidiary of IBREL.

Motilal Oswal has revised its FY11 revenue estimate to Rs11.9b (Rs8.1b earlier) and PAT estimate to Rs2.2b (Rs1.4b earlier). We have rolled over our NAV estimate to FY13 at Rs291/share, while our FY12E NAV has been revised to Rs256/share (Rs280/share earlier, primarily to incorporate the lower probability of getting incentive FSI at Worli Mill land). IBREL is available at 52% discount to its FY12E NAV of Rs256/share and trades at 0.47x FY12E BV of Rs257. Maintain Buy.

Source : Equity Bulls

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