23 April 2013
4QFY13 Results Update |
Sector: Real Estate
Mahindra Lifespaces
BSE Sensex
S&P CNX
19,170
5,834
Bloomberg
MLIFE IN
Equity Shares (m)
40.8
M.Cap. (INR b)/(USD b) 15.4/0.3
52-Week Range (INR)
452/284
1,6,12 Rel. Perf. (%)
-2/-9/6
CMP: INR378
TP: INR480
Buy
Financials & Valuation (INR b)
Y/E March
Net Sales
EBITDA
Adj PAT
Adj EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Div. Yield (%)
10.9
1.2
9.8
1.3
10.6
1.1
9.3
1.3
10.2
1.0
8.0
1.3
2013 2014E 2015E
7.4
2.4
1.4
34.6
18.7
317
10.9
11.4
18.4
7.9
2.7
1.5
35.6
2.7
349
10.2
12.3
17.9
9.0
2.9
1.5
37.2
4.5
385
9.7
12.3
16.6
Mahindra Lifespaces (MLIFE) reported 4QFY13 standalone results below our
estimate, while consolidated numbers surprised positively.
MLIFE's standalone revenue for 4QFY13 stood at INR1b (-27% YoY, v/s est. of
INR981m), while EBITDA declined 46% YoY to INR172m (est. of INR227m).
EBITDA margin improved 2.1pp QoQ to 16.8%, but fell below our estimate
due to weaker progress in Splendor II . PAT declined 28% YoY to INR232m (est.
of INR290m), further impacted by lower other income, but offset by lower
effective tax rate as well.
4QFY13 consolidated revenue stood at INR3.3b, +25% YoY, while PAT (pre
minority) was at INR925m, +166% YoY. FY13 consolidated revenue stood at
INR7.4b (+5% YoY, v/s est. of INR6.1b), EBITDA at INR2.4b (+26% YoY, v/s est. of
INR1.5b) and PAT at INR1.4b (+19% YoY, v/s est of INR929m).
Sharp increase in consolidated revenue in 4QFY13 is attributable to (1)
multiple projects crossing 25% threshold: (a) three phases of Bloomdale
(Nagpur), (b) Iris 2/3 (Chennai) and (c) Ashvita (Hyderabad, in standalone
entity), and (2) uptick in new leasing at MWC Jaipur: leased out 73 acres
(~INR1b) in 4QFY13, of a total 75 acres in FY13.
MLIFE sold 0.38msf (INR1.5b) in 4QFY13, a stable run-rate against (0.39msf)
INR1.5b in 3QFY13 and 0.2msf (INR0.5b) in 4QFY12. FY13 pre-sales stood at
1.1msf (INR4.4b) v/s our estimate of 1.3msf (INR4.8b) and FY12 sales of 1.2msf
(INR5.9b). 4QFY13 pre-sales were driven by (1) Ashvita (Hyderabad) - 0.21msf
and (2) MWC Chennai projects (Iris and Aqualily) 0.14msf. Incremental pre-
sales have been weak in Aura (Gurgaon) and phase I/II of Bloomdale (Nagpur).
It acquired five projects (~2msf, with guided revenue potential of INR10b) in
FY13, along with one more affordable housing project in Boisar, Mumbai
(0.55msf) in Apr-13. 4QFY13 acquisitions include (1) a premium project in
Andheri (0.37msf) and (2) Bangalore (0.67msf). Consolidated net debt
increased by INR3.2b QoQ to INR7.1b (net DER of 0.55x).
The stock trades at 1x FY15E BV, 10.2x FY15E EPS and 27% discount to our
FY15E SOTP value of INR520/share. Maintain
Buy
with a target price of INR480.
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +9122 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.
1

Mahindra Lifespaces
Standalone revenue in line, margin below estimates
MLIFE's standalone revenue for 4QFY13 stood at INR1b (-27% YoY, v/s est. of
INR981m), while EBITDA declined 46% YoY to INR172m (est. of INR227m).
EBITDA margin improved 2.1pp QoQ to 16.8% but fell below our estimate due to
weaker progress in Splendor II (high margin Mumbai project).
PAT declined 28% YoY to INR232m (est. of INR290m), further impacted by lower
other income, but offset by lower effective tax rate as well.
QoQ uptick in revenue booking is attributable to completion of Angelica (Mumbai),
with 21% POCM booking in 4QFY13 and Ashvita (Hyderabad) crossing 25% of
revenue recognition threshold.
Consolidated revenue ahead of estimate led by (1) multiple projects crossing
25% threshold and (2) uptick in new leasing at MWC Jaipur
4QFY13 consolidated revenue stood at INR3.3b, +25% YoY, while PAT (pre minority)
was at INR925m, +166% YoY.
FY13 consolidated revenue stood at INR7.4b (+5% YoY, v/s est. of INR6.1b), EBITDA
at INR2.4b (+26% YoY, v/s est. of INR1.5b) and PAT at INR1.4b (+19% YoY, v/s est of
INR929m).
The sharp increase in consolidated revenue (outside standalone projects) in
4QFY13 is attributable to:
1) Multiple projects crossing 25% threshold: (a) three phases of Bloomdale
(Nagpur), (b) Iris 2/3 (Chennai), and (c) Ashvita (Hyderabad, in standalone
entity).
2) Uptick in new leasing at MWC Jaipur: Leased out 73 acres (~INR1b) in 4QFY13 of
the total 75 acres in FY13.
Based on our estimates ~46% of the revenue outside the standalone entity has
been contributed by residential projects at MRDL and MITL (Aqualily and Iris Court).
The balance 54% comes from fresh 73-acre transaction in Jaipur DTA (seven clients
including existing client JCB taking 45 acres) and 18 acres in Chennai processing
area by BASF and NCR.
Revenue break-up from key projects (INR m)
Projects
Splendor II
Angelica
Aura 2 (Gurgaon)
Aura 3 (Gurgaon)
Aura 4 (Gurgaon)
Aura 5 (Gurgaon)
Ashvita (Hyderabad)
Rental
Standalone Revenue
Bloomdale
Aqualily Villas
Aqualily Apts
Iris
Jaipur DTA
Chennai
Subsidiary Revenue
Consol revenue
INR m
177
304
15
17
127
69
222
69
1,022
298
123
222
426
973
280
2,322
3,344
(%)
17
30
1
2
12
7
22
7
100
13
5
10
18
42
12
100
Remarks
Construction has been slow
Delivered in 4QFY13
Construction has been slow
Construction has been slow
Progressing steady
Progressing steady
Crossed 25% threshold in 4QFY13
Crossed 25% threshold in 4QFY13
Crossed 25% threshold in 4QFY13
Sold 73 acres in 4QFY13
Sold 18 acrea in 4QFY13
Source: Company, MOSL
23 April 2013
2

Mahindra Lifespaces
Margins improve QoQ due to higher revenue booking, but declined YoY on account of lower
contribution from Mumbai based projects (%)
Source: Company, MOSL
Annual pre-sales below estimate; Lower contribution from Mumbai projects
dent average realizations; Execution weakens in select projects
MLIFE sold 0.38msf (INR1.5b) in 4QFY13, a stable run-rate against (0.39msf) INR1.5b
in 3QFY13 and 0.2msf (INR0.5b) in 4QFY12. FY13 pre-sales stood at 1.1msf (INR4.4b)
v/s our estimate of 1.3msf (INR4.8b) and FY12 sales of 1.2msf (INR5.9b).
4QFY13 pre-sales were driven by (1) Ashvita (Hyderabad) - 0.21msf and (2) MWC
Chennai projects (Iris and Aqualily) 0.14msf. Incremental pre-sales have been
weak in Aura (Gurgaon) and phase I and II of Bloomdale (Nagpur).
Among the key launches over next four to six quarters would be (1) Sopan Baug
(Pune, 0.9msf), (2) Alibaug (0.23msf), (3) Chennai projects (affordable housing of
0.72msf and budget housing of 0.5msf), (4) the recently-acquired premium project
in Andheri (0.37msf) and (5) subsequent phases of Hyderabad, Nagpur and Pune
(Antheia).
Execution has been broadly steady barring few projects such as Splendor II, Aura
2/3 and Antheia (Pune) - which have posted weak QoQ progress in construction.
Funding constraints with the respective contractors have been a major reason
cited by the management.
Sales stable QoQ (msf)
Trend of sales value (INR b)
Average realization declined YoY in FY13
(INR/sf)
Source: Company, MOSL
3
23 April 2013

Mahindra Lifespaces
On an acquisition spree; 3 of 8 MoUs concluded; Gearing up to 0.55x
MLIFE acquired five projects (~2msf, with guided revenue potential of INR10b) in
FY13, along with one more affordable housing project in Boisar, Mumbai (0.55msf)
in Apr-13. 4QFY13 acquisitions include (1) premium project in Andheri (0.37msf)
and (2) Bangalore (0.67msf).
Based on management's indication, these 8 MoUs, including concluded 3 projects,
have the potential to add ~INR50b of revenue stream over the upcoming period.
A meaningful portion of these projects are in Mumbai and NCR markets and thus
expected to boost average sales realization hereon.
We believe conclusion of the MoUs would meaningfully upgrade our NAV and
earnings estimates, if acquired at value accretive terms.
However, on the back of new acquisitions, consolidated net debt increased by
INR3.2b QoQ to INR7.1b (net DER of 0.55x). With further acquisitions in the pipeline,
we expect the leverage level to increase, although the management had earlier
hinted at possible stake dilution to private equity in select projects.
Execution progress update:
Mumbai projects (%)
Gurgaon projects (%)
Chennai projects (%)
Source: Company, MOSL
Valuation and view
4QFY13 P&L has posted strong numbers led by higher revenue booking in
subsidiary projects along with encouraging offtake in MWC DTAs. We believe steady
execution and new launches of recently-acquired projects remain the key factor
to drive this earnings and cash flow growth.
Leverage has increased due to multiple acquisitions. Thus, any major delay in
monetizing some of these acquisitions, due to approval hurdles, could be a
potential pressure point.
Recent policy relaxation on the SEZ front should be beneficial for the company,
with a better leasing velocity potential in MWC Jaipur. The management is
evaluating to re-align its strategy based on the proposed changes in norms.
Key near term triggers would be (a) new value accretive acquisitions, (b) faster
launch of acquired projects and (c) divestment of Byculla land at attractive price,
which would also moderate the leverage level.
The stock trades at 1x FY15E BV, 10.2x FY15E EPS and 27% discount to our FY15E
SOTP value of INR520/share. Maintain
Buy
with a target price of INR480.
4
23 April 2013

Mahindra Lifespaces
Mahindra Lifespaces: an investment profile
Company description
Mahindra Lifespaces (MLIFE) was constituted by
themerger of Great Eastern Shipping Company
Limited(GESCO)
and
Mahindra
Realty
&
InfrastructureDevelopers Limited (MRIDL). MLIFE is a
leading realestate development company in India,
focused onresidential projects and integrated
infrastructuredevelopment. It has till date developed
~8msf ofpremium residential and commercial space.
Recent developments
Multiple projects crossed 25% threshold in 4QFY13:
(a) three phases of Bloomdale (Nagpur), (b) Iris 2/3
(Chennai), and (c) Ashvita (Hyderabad, in standalone
entity).
MLIFE acquired five projects (~2msf, with guided
revenue potential of INR10b) in FY13, along with one
more affordable housing project in Boisar, Mumbai
(0.55msf) in Apr-13. 4QFY13 acquisitions include (1)
premium project in Andheri (0.37msf) and (2)
Bangalore (0.67msf).
Key investment arguments
Having pioneered large format integrated
development of in the private sector, MLIFE enjoys
the first mover advantage. It has a healthy balance
sheet, with comfortable leverage.
MLIFE's multi-product SEZ in Chennai is the
firstsuccessful operational private sector SEZ in
India.
Conclusion of the existing MoUs would meaningfully
upgrade our NAV and earnings estimates if acquired
at a value accretive terms.
Valuation and view
Key near term triggers would be (a) new value
accretive acquisitions, (b) faster launch of acquired
projects and (c) divestment of Byculla land at
attractive price, which would also moderate the
leverage level.
The stock trades at 1x FY15E BV, 10.2x FY15E EPS and
27% discount to our FY15E SOTP value of INR520/
share. Maintain
Buy
with a target price of INR480.
Comparative valuations
P/E (x)
P/B (x)
EV/Sales (x)
EV/EBITDA (x)
FY13E
FY14E
FY13E
FY14E
FY13E
FY14E
FY13E
FY14E
MLIFE
10.9
10.6
1.2
1.1
3.2
3.1
9.8
9.3
Phoenix
34.6
20.3
2.1
1.9
11.8
7.4
20.4
13.1
Oberoi
21.0
13.3
2.5
2.1
9.1
5.5
15.4
9.0
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
35.6
37.2
Consensus
Forecast
34.9
39.3
Variation
(%)
2.0
-5.3
FY14
FY15
Target Price and Recommendation
Current
Price (INR)
378
Target
Price (INR)
480
Upside
(%)
27.0
Reco.
Buy
Stock performance (1 year)
Shareholding Pattern (%)
Mar-13
Promoter
Domestic Inst
Foreign
Others
51.0
3.5
29.1
16.4
Dec-12
51.1
3.8
28.6
16.6
Mar-12
51.1
5.9
26.2
16.8
23 April 2013
5

Mahindra Lifespaces
Financials and Valuations
23 April 2013
6

Mahindra Lifespaces
N O T E S
23 April 2013
7

Disclosures
This report is for personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement
to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates
or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt
or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
The information contained herein is based on publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, MOSt and/or its
affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or
employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report . MOSt or any of its affiliates
or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness
for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision
based on this report or for any necessary explanation of its contents.
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest
Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Disclosure of Interest Statement
1. Analyst ownership of the stock
2. Group/Directors ownership of the stock
3. Broking relationship with company covered
4. Investment Banking relationship with company covered
Mahindra Lifespaces
No
No
No
No
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or
will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible
for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For U.K.
This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity to
which this document relates is only available to investment professionals and will be engaged in only with such persons.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States.
In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state
laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein
are not available to or intended for U.S. persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major
institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended
(the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into
a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within
the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer,
MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst
account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors
Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore
to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Nihar Oza
Kadambari Balachandran
Email: niharoza.sg@motilaloswal.com
Email : kadambari.balachandran@motilaloswal.com
Contact: (+65) 68189232
Contact: (+65) 68189233 / 65249115
Office address: 21 (Suite 31), 16 Collyer Quay, Singapore 049318
Motilal Oswal Securities Ltd
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com