21 May 2015
4QFY15 Results Update | Sector: Real Estate
Equity Shares (m)
M.Cap.(INR b)/(USD b)
243 / 100
TP: INR160 (+29%)
Barring interim excitement in Phase-V projects, outlook remains subdued
Dip in OPM, lower interest cost boost PAT:
Revenue was flat YoY and QoQ at
INR19.5b (7% miss). RentCo contributed 29% of revenue; contribution from DevCo
remained muted, barring fresh revenue from
EBITDA declined 13% QoQ to INR6.9b (16% miss) and EBITDA margin contracted
5pp QoQ to 35.6% (our estimate: 39.5%). PAT was INR1.7b, higher than our
estimate of INR1.1b, boosted by lower than expected interest cost.
Strong 4Q presales, but excitement only Phase-V centric:
bounced back sharply –0.9msf (INR19.8b) in 4QFY15 against 1.4msf (INR18.8b) in
9MFY15. This takes cumulative FY15 presales to 2.3msf (INR38.5b), down 5% YoY.
Revival in presales was mostly Phase-V centric (Crest and
~95% of 4Q presales and ~84% FY15 presales). Dismal dynamics in the NCR remain
an overhang for other assets. Management guidance for the near term remains
subdued, with normalcy likely to be 9-12 months away.
Gearing up, though 4Q operations near breakeven:
Net debt increased by
INR6.3b QoQ to INR217b (0.78x), as negative FCFE continues, with (a) significantly
higher tax outgo of INR4.4b in 4Q (INR2.6b in 9M), and (b) INR3b CCI penalty.
Adjusting for these, core operations generated breakeven cash flows. Net debt
was up INR22.7b in FY15, with negative FCFE (-INR29b) and INR6.5b of
All overhangs at status quo:
Barring the interim excitement in Phase-V projects,
the outlook remains subdued. A muted NCR market, weak cash flows and multiple
legal issues (CCI, tax liabilities, land ownership cases) remain major overhangs. The
immediate headwinds are strong enough to impede near-term re-rating. We cut
our target price by ~10% to INR160 (25% discount to NAV) on account of
continued weakness in operational outlook and no visibility on legal hurdles yet.
The stock trades at 0.77x FY17E adjusted BV; we believe current valuations factor
in the prevailing concerns. Maintain
Near-term upside is contingent on macro
triggers (like rate cuts).
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Free float (%)
Avg Val,INRm/Vol ‘000
Financials & Valuations (INR b)
EPS Gr. (%) -16.5
Payout (%) 77.2
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
(Anchit.Agarwal@MotilalOswal.com); +91 22 3927 2010
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
Bloomberg, Thomson Reuters, Factset and S&P Capital.