Maintain Buy on Anant Raj Industries - Motilal Oswal

Anant Raj Industries (ARCP IN; Mkt Cap USD0.7b, CMP Rs101, Buy)

Anant Raj's 3QFY11 results were better than our expectations. EBITDA was Rs722m while EBITDA margin jumped to 62%. net profit declined 25% YoY.

The sharp increase in EBITDA margin is primarily attributable to higher realizations in its Manesar project. Revenue grew 50.5% YoY to Rs1.2b.

While Anant Raj has not launched any new project in 3QFY11, phase-II of its Manesar project has witnessed strong response.

In 3QFY11, Anant Raj witnessed a sharp increase in debt (in line with the management guidance). Gross debt was Rs9.3b as at Dec 2010, net debt at Rs7.1b.

We are revising our FY11 PAT estimate upward to Rs1.9b. We are downgrading our FY12 PAT estimate to Rs2.3b to incorporate (a) delay in the launch of the Hauz Khas and Bhagwandas projects, and (b) higher interest expense on account of increase in net debt to Rs7.1b (v/s Rs3.6b in 2QFY11). The stock trades at 12.8x FY12E EPS of Rs7.9 and 9.3x FY13E EPS of Rs10.8, and at ~49.5% discount to its FY13E NAV of Rs200/share. Maintain Buy.

Source : Equity Bulls

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