22 April 2014
4QFY14 Results Update | Sector:
Real Estate
Mahindra Lifespaces
BSE SENSEX
22,758
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
6,815
MLIFE IN
40.8
15.6/0.3
472/327
1/-19/-18
CMP: INR381
TP: INR430
Buy
Financials & Valuation (INR Million)
Y/E March
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (X)
2014 2015E 2016E
7,053
1,702
1,006
24.6
-28.9
308.9
7.9
8.2
15.5
1.2
7,754
2,056
1,031
25.3
2.5
329.9
7.9
8.6
15.1
1.2
9,411
2,586
1,229
30.1
19.1
356.8
8.8
10.2
12.7
1.1
P&L weak as margin pressure persists:
MLIFE’s consolidated revenue stood at
INR1.9b, -48% YoY (v/s est. of INR1.5b). EBITDA de-grew 81% YoY to INR259m (v/s
est. of INR421m) as margins plunged sharply due to (1) weakness in ongoing
residential projects (standalone margins at 5.7%), (2) cost escalations in Chennai
projects and (3) lower revenue from processing area. Higher other income and lower
interest cost kept PAT ahead of estimate at INR303m.
Approval cycle still elusive, pre-sales remain weak:
Approval cycle remains elusive
with no new launches in 4QFY14. Hence, pre-sales continue to remain weak at INR1b
in 4QFY14 (v/s est. of INR1.1b). FY14 annual sales stood at 0.9msf (INR3.7b), down
16% YoY. Antheia (Pune) accounted for 32% of pre-sales, while
Chennai/Nagpur/Hyderabad projects contributed 26%/20%/14%. In MWC Jaipur, it
sold 2.36 acres of DTA area to existing customer, while monetization of balance 40
acres of industrial area in MWC Chennai continue to hinge on government approval.
Other 4QFY14 updates:
Acquired 6% stake of Mahindra group in MWCDL (Chennai
township) at ~INR163m. Also paid ~INR471m for acquiring another 0.48msf of area
across Bangalore and Gurgaon Sector 59 projects.
Focus on launch and monetization but…:
Management highlighted a strong focus on
monetization of recently-acquired projects, which have considerably increased
gearing and deteriorated working capital and undergoing elongated approvals cycle
and regulatory uncertainties. In MWC Chennai, it hopes to monetize the balance 40
acres (~INR1.4b) in FY15-16.
…recovery cycle could be a year away:
With most of its planned launches likely to
take place from 2HFY15, we expect benefits of operating cash flow, improvement in
capital efficiencies and gearing only in FY16. The stock trades at 1.1x FY16E BV, 12.7x
FY16E EPS. We maintain a
Buy
with a target price of INR430, albeit with a view of
delayed recovery cycle. Any clarity on monetization of Byculla land (which has
reached an advanced stage) offers near term trigger.
Sandipan Pal
(Sandipan.Pal@MotilalOswal.com); +91 22 3982 5436
Investors are advised to refer through disclosures made at the end of the Research Report.

Mahindra Lifespaces
Revenue break-up across projects in 4QFY14
Projects
Antheia Ph 1 (Pune)
Aura Ph 2-5 (Gurgaon)
Ashvita (Hyderabad)
Rentals
Others
Standalone Revenue
Bloomdale (Nagpur)
Aqualily Villas (Chennai)
Aqualily Apts
Iris/Nova
Jaipur DTA/SEZ
Evolve
Others
Subsidiary Revenue
Consol revenue
INR m
240
200
320
44
58
862
150
0
160
130
40
220
332
1,032
1,894
(%)
17
14
22
3
4
60
10
0
11
9
3
15
23
72
100
Phase IIA/B yet to cross threshold
Handover done in Villa phase C,D and Apartment
phase A
Good execution progress, crossed threshold in 4Q
Leased out 2.36acre of new area in MWC Jaipur
Total leased area of 0.35msf out of total 0.43msf
From MWC Chennai and Jaipur
Remarks on construction progress
Good presales, Progress has been steady
Incremental presales low, execution steady
Phase III crossed threshold
Marginal QoQ uptick
Revenue break-up for 4QFY14 (INR m)
Standalone (Residential)
Processing area
278
1,253
1,069
953
4QFY13
111
530
509
610
1QFY14
89
270
640
880
2QFY14
434
146
320
460
510
3QFY14
260
440
760
4QFY14
Subsidiaries (Residential)
Others
Consol margins plunged sharply (%)
EBITDA Margin (Stndln)
40
30
20
10
0
EBITDA Margin (Consol)
Source: Company, MOSL
Source: Company, MOSL
Presales volume (msf) remains subdued
Presales value and realizations
Sales value (INR b) RHS
Avg. Realization (INR/sf)
Source: Company, MOSL
Source: Company, MOSL
22 April 2014
2

Mahindra Lifespaces
Torpidity continues, smaller ticket & Hyderabad products doing better
Presales at Mlife’s portfolio continue to remain muted in 4QFY14 with release of
only Anthea (Pune) and Nova (Chennai) inventory.
Hyderabad has been stable, while only small ticket products (INR3-5m) at
Chennai and Pune are showing resilience.
Costlier propositions viz. Aqualily and Iris have been weak. However, post
Telengana clarity, management has expressed extreme optimism on Hyderabad
market with likely expansion gradually.
Approval delay could defer recovery cycle
While positive Election outcome could revive investors’ participation and
accelerate buying decision for end consumers, MLIFE is likely to witness a mid-
cycle recovery (not an immediate recovery) due to possible deferment of new
launches to 2HFY15 owing to elusive approval time line.
Out of 6msf of launch plan, barring affordable housing in Chennai, and smaller
ticket inventory releases in existing locations like Chennai, Pune and Hyderabad,
we expect majority of its high value launches in Mumbai, Gurgaon and
Bangalore to take place post election, possibly late FY15.
Byculla deal may aid avenue to growth
Byculla land sell seems nearing conclusion as the company has already met all
required CPs (v/s 10 out of 12 CPs done till 3QFY14 as per concall commentary).
We believe cash flow unlocked from the monetization would be very crucial to
drive new acquisitions on radar. The management is currently evaluating 2
projects (in Mumbai and Bangalore), of which One is at a definitive
documentation stage.
At consolidated net debt of INR12b (0.96x), the management believes the
leverage to have peaked out. While projects under evaluation may require fresh
fund commitment, monetization of Byculla land is likely to address the same
without stretching the gearing further.
Fresh operating cycle benefits to percolate almost after a year
MLIFE is at the junction of two operating cycles, where (1) its ongoing projects
are impacted due to cost escalations and margin pressure, and (2) the recently
acquired projects are thwarted by approval delays, thus deferring the start of a
fresh operating cycle. Additionally, multiple acquisitions have inflated its
leverage, along with a weak demand scenario remaining overhang.
In the event of a broad based revival in demand after a better polito-economic
scenario, we expect MLIFE to be able to ride on recovery cycle with a little lag,
as the benefits of the fresh operating cycle is likely to percolate from FY16
onwards.
The stock trades at 1.1x FY16E BV (RoE 7.5-8% over FY15-16) and 12.7x FY16E
EPS keeps the valuation below recent historical average. We maintain
Buy,
albeit with a view of delayed recovery cycle and target price of INR430.
Key near-term triggers could be (1) divestment of Byculla land at attractive
price, and (2) faster approvals of acquired projects which would also moderate
leverage level.
3
22 April 2014

Mahindra Lifespaces
Story in Charts
Launch plan robust, but approval hurdles major overhang
Key projects under launch plan
Andheri (Mumbai)
Alibaug (MMR)
Boisar (Mumbai)
Bannerghatta (Bangalore)
Sector 59 (Gurgaon)
Avadi (Chennai)
New projects
Anthea (Pune)
Ashvita (Hyderabad)
Aqualily (Chennai)
Nova (Chennai)
Bloomdale (Nagpur)
New phases of existing projects
Area (msf)
0.4
0.2
0.5
1.0
1.1
0.7
3.4
1.1
0.2
0.2
0.3
0.9
2.7
Likely launch time
2HFY15
1HFY15
2HFY15
2HFY15
2HFY15
1QFY15
Nova (Chennai), Hyderabad and Pune
(small ticket products) will be key
proposition to get priority for near-term
launch plan
Expect gradual uptick in presales 2HFY15 onwards…
10
8
6
4
2
0
Value (INR b)
Realization (INR/sf)
7000
6000
5000
4000
3000
2000
…to drive return ratios (%), and…
14
12
10
8
6
4
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
RoE
RoCE
Source: Company, MOSL
Source: Company, MOSL
…lower gearing, which is hovering near ~1x
Net debt (INR b)
Net DER (x)
1.0
0.9
Value MLIFE SOTP at INR484, TP at 10% discount (INR/sh)
65
0.8
79
136
251
484
64
28
139
0.5
0.3
2.4
FY08
0.2
1.9
FY09
0.3
2.9
FY10
0.2
2.4
FY11
0.3
3.6
FY12
7.1
FY13
12.1
11.9
11.4
FY14 FY15E FY16E
Source: Company, MOSL
Source: Company, MOSL
22 April 2014
4

Mahindra Lifespaces
Mahindra Lifespaces: an investment profile
Company description
Mahindra Lifespaces (MLIFE) was constituted by the
merger of Great Eastern Shipping Company Limited
(GESCO) and Mahindra Realty & Infrastructure
Developers Limited (MRIDL). MLIFE is a leading real
estate development company in India, focused on
residential projects and integrated infrastructure
development. It has till date developed 8msf+ of
premium residential and commercial space.
Recent developments
Acquired 6% stake of Mahindra group in MWCDL
(Chennai township) at ~INR163m. Also paid
~INR471m for acquiring another 0.48msf of area
across Bangalore and Gurgaon Sector 59 projects.
Valuation and view
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 first
successful operational private sector SEZ in India.
Faster monetization of recently acquired projects
would be the key to improve RoE.
We expect that the benefits of the fresh operating
cycle is likely to percolate from FY15-end/FY16
onwards, but till then, under prevailing uncertain
macro-economic condition, the monetization will
continue to remain torpid. Moreover, the outlook of
Gurgaon and Mumbai markets are challenging which
comprises a meaningful portion of its launch
pipeline.
The stock trades at 1.1x FY16E BV (RoE 7.5-8% over
FY15-16) and 12.7x FY16E EPS keeps the valuation
below recent historical average. We maintain
Buy,
albeit with a view of delayed recovery cycle and
target price of INR430.
Comparative valuations
MLIFE
P/E (x)
P/BV (x)
EV/Sales (x)
EV/EBITDA (x)
FY14E
FY15E
FY14E
FY15E
FY14E
FY15E
FY14E
15.5
15.1
1.2
1.2
4.1
3.7
17.0
Oberoi
23.5
11.4
1.7
1.5
9.0
4.3
16.6
GPL
29.7
23.2
2.0
1.8
3.7
3.5
13.2
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
FY15
FY16
25.3
30.1
Consensus
Forecast
28.8
34.0
Variation
(%)
-12.1
-11.6
Target price and recommendation
Current
Price (INR)
381
Target
Price (INR)
430
Upside
(%)
12.9
Reco
Buy
Shareholding pattern (%)
Mar-14
Promoter
Domestic Inst
Foreign
Others
51.0
1.9
31.2
15.9
Dec-13
51.0
2.1
31.2
15.6
Mar-13
51.0
3.5
29.1
16.4
Stock performance (1-year)
22 April 2014
5

Mahindra Lifespaces
Financials and valuation
Income statement
Y/E March
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Min. Int. & Assoc. Share
Adj Cons PAT
2013
7,383
5.3
2,419
32.8
87
2,332
312
342
0
2,361
799
33.9
1,562
1,562
21.3
-148
1,414
2014
7,053
-4.5
1,702
24.1
101
1,602
502
509
0
1,609
509
31.6
1,100
1,100
-29.6
-94
1,006
(INR Million)
2015E
7,754
9.9
2,056
26.5
133
1,923
712
500
0
1,712
565
33.0
1,147
1,147
4.2
-115
1,031
2016E
9,411
21.4
2,586
27.5
148
2,438
835
500
0
2,103
715
34.0
1,388
1,388
21.0
-159
1,229
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2013
34.6
36.8
316.9
6.0
20.3
11.0
10.4
1.2
3.2
9.8
1.6
11.5
12.4
0.3
44.6
806.2
350.2
0.5
2014
24.6
27.1
308.9
6.0
28.6
15.5
14.1
1.2
4.1
17.0
1.6
7.9
8.2
0.3
56.4
919.4
434.6
1.0
2015E
25.3
28.5
329.9
6.0
27.9
15.1
13.4
1.2
3.7
14.0
1.6
7.9
8.6
0.3
61.9
854.5
420.4
0.9
2016E
30.1
33.7
356.8
6.0
23.4
12.7
11.3
1.1
3.0
10.9
1.6
8.8
10.2
0.3
61.1
682.4
352.7
0.8
Balance sheet
Y/E March
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2013
408
12,522
12,930
9,657
-372
23,816
2,577
487
2,090
72
1,332
24,136
16,307
902
1,442
5,484
4,764
4,764
0
19,372
23,816
2014
409
12,208
12,617
14,011
-434
27,896
2,830
588
2,243
154
3,014
27,874
17,764
1,090
667
8,353
6,371
6,371
0
21,503
27,935
(INR Million)
2015E
2016E
409
409
13,067 14,167
13,475 14,575
13,836 13,178
-434
-434
28,660 29,210
3,273
3,745
821
969
2,451
2,776
169
186
3,014
3,014
28,567 28,808
18,152 17,594
1,315
1,576
692
588
8,409
9,049
6,563
6,595
6,563
6,595
0
0
22,005 22,212
28,660 29,210
E: MOSL Estimates
Cash flow statement
Y/E March
OP/(Loss) before Tax
Depreciation
Others
Interest
Direct Taxes Paid
(Inc)/Dec in Wkg Cap
CF from Op. Activity
(Inc)/Dec in FA & CWIP
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
2013
2,361
87
0
312
799
-4,035
-2,479
-305
416
-157
-46
107
2,991
312
288
2,497
-29
1,470
1,442
2014
1,609
101
0
502
509
-2,907
-880
-590
-1,682
-62
-2,333
-1,126
4,354
502
288
2,438
-776
1,442
667
(INR Million)
2015E
1,712
133
0
712
565
-477
1,835
-637
0
0
-637
0
-174
712
288
-1,174
25
667
692
2016E
2,103
148
0
835
715
-311
2,369
-692
0
0
-692
0
-658
835
288
-1,781
-104
692
588
22 April 2014
6

Mahindra Lifespaces
NOTES
22 April 2014
7

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Mahindra Lifespaces
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22 April 2014
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8