25 July 2014
1QFY15 Results Update | Sector:
Real Estate
Indiabulls Real Estate
BSE SENSEX
26,127
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
7,790
IBREL IN
424.9
32.8/0.5
109/45
-23/0/-21
Financials & Valuation (INR Million)
Y/E Mar
Net Sales
EBITDA
Adj PAT
EPS (INR)
Gr. (%)
BV/Sh.(INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (X)
2015E 2016E 2017E
20,625 21,821 28,051
5,821
2,236
5.9
-0.1
182.5
3.2
6.2
13.2
0.4
7,114
3,575
9.4
59.9
187.8
5.1
7.1
8.2
0.4
9,515
5,712
15.0
59.8
194.2
7.8
9.1
5.2
0.4
CMP: INR77
TP: INR145
Buy
Revenue beat, but margins dip:
Indiabulls Real Estate (IBREL) reported 1QFY15
revenue above estimate at INR6.1b (+20% YoY). Change in project mix impacted
margins to 23.5% (v/s 34.5% QoQ, 28.9% YoY). EBITDA stood at INR1.4b (-2% YoY),
while higher interest expenses restrict PAT at INR389m (-46% YoY). We expect
revenue commencement in Blu (Worli) in 2QFY15.
Presales remains weak, but new launch to drive hereon:
Presales was subdued at
0.5msf (INR5.6b), albeit up QoQ 0.5msf (INR3.6b) in 4QFY14. It launched 3.6msf in
Gurgaon (One Indiabulls) and 0.8msf in Vizag (Sierra) towards the end of 1Q.
Encouraging early response to these projects along with 4 new launches should
drive presales hereon. We expect INR32b of presales in FY15 v/s management’s
target of ~INR40b.
Negative FCFE led net debt up by ~INR4b QoQ:
Weakness in presales in recent
quarters has led deterioration in cash flows. We understand core FCFE in 1QFY15
stood at +INR4b, while there was ~INR8b of payment made towards acquisition of
Hanover Square project (London) out of total INR15.5b of acquisition cost.
Consequently, net debt was up INR4b QoQ to INR28.6b (0.41x).
Maintain Buy:
Company has operationally outperformed its regional peers during
down-cycle and accumulated a strong asset base to benefit from demand revival.
We expect IBREL to enjoy healthy operating cash flow on the back of revival in
demand cycle and new launches of ~6msf in FY15. IBREL trades at 0.4x FY16E P/B
(v/s 1.2x of MOSL coverage universe average and IBREL’s historical average of
0.75x and post FY08 maximum of 1.1x) and 8.2x FY16E EPS. We value SOTP at
INR160/share and target price at 10% discount at INR145/share (implied 9x FY16E
cash EBITDA, 0.85x P/B). Maintain Buy.
(INR Million)
FY14
1QE Var (%)
3,466
76
-31.8 -162.9
971
48
-33.9
-93.6
28.0
-15.9
60
4
550
33
150
-10
511
52
174
33
34.0
-12.4
337
61
-52.0
-56.5
337
15
-54
-13
0.5
4.0
3.5
60.3
7,000
54
Quarterly Performance (Consolidated)
Y/E March
1Q
Sales
5,083
Cha nge (%)
136.8
EBITDA
1,467
Cha nge (%)
85.4
As % of Sa l es
28.9
Depreci a ti on
55
Interes t
491
Other Income
165
PBT
1,087
Ta x
385
Effecti ve Ta x Ra te (%)
35.4
Reported PAT (Pre Minority
702
Cha nge (%)
144.4
Reported PAT
726
Cha nge (%)
92
Presales (msf)
1.6
Presales (INR b)
15.9
Realizations (INR/sf)
10,205
FY14
2Q
3Q
4,506
4,497
31.6
35.7
1,687
1,119
39.5
-14.8
37.4
24.9
46
49
526
661
201
129
1,316
538
452
235
34.4
43.7
863
303
136.9
-39.5
812
284
152
-46
0.7
0.6
6.4
4.8
9,333
7,778
4Q
3,276
-20.5
1,130
-17.6
34.5
59
535
142
678
243
35.8
436
-27.7
417
-20
0.5
3.6
6,766
1Q
6,101
20.0
1,436
-2.2
23.5
62
734
134
774
230
29.8
543
-22.6
389
-46
0.5
5.6
10,788
FY15
2QE
3QE
7,012 3,712
55.6 -17.4
2,104 1,114
24.7
-0.5
30.0
30.0
62
62
780
740
150
180
1,412
492
480
167
34.0
34.0
932
325
8
7
882
425
9
50
0.8
1.2
6.5
10.0
8,667 8,333
FY14
4QE
3,799
16.0
1,168
3.4
30.7
62
719
236
623
212
34.0
411
-5.6
541
30
1.1
9.5
8,319
17,362
33.5
5,404
15.3
31.1
210
2,213
637
3,619
1,315
36.3
2,238
28.5
2,238
29
3.4
30.8
9,047
FY15E
20,625
18.8
5,821
7.7
28.2
248
2,973
700
3,300
1,089
33.0
2,211
-1.2
2,236
0
3.6
31.6
8,752
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.

Indiabulls Real Estate
Trend in presales (msf) volume
2.3
1.6
1.1
0.8
1.2
0.9
0.6
1.2
0.9
0.7
0.7 0.6
0.5 0.5
4.9 4.0
4.9
Presales value up QoQ led by higher booking in Sky/Blu
Sales Value (INRb)
10.7 10.2
13.4
Realization RHS ('000 INR/sf)
10.2 9.3
8.2
7.8 6.8
10.8
Source: Company, MOSL
Source: Company, MOSL
Expect new launch to drive volume hereon (msf)
5.9
4.2
Trend in expected annual presales and realizations
Value (INR b)
Realization (INR/sf)
3.5
2.8
2.8
3.4
3.6
13.5
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY10
48.4
FY11
19.8
FY12
30.0
FY13
30.8
FY14
31.6
FY15E
38.3
FY16E
Source: Company, MOSL
Source: Company, MOSL
Net debt to go up on acquisitions of London project
0.5
0.3
0.1
-0.1
-12.4
-0.3
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
-3.9
0.0
3.2
12.4
23.8
20.9
24.0
35.6
33.1
0.3
0.3
0.5
Higher revenue backlog to drive gradual uptick in RoE (%)
20
15
10
5
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
RoE
RoCE
Net debt (INR b)
Net DER (x)
Source: Company, MOSL
Source: Company, MOSL
25 July 2014
2

Indiabulls Real Estate
Indiabulls Real Estate: an investment profile
Company description
IBREL, the de-merged real estate arm of Indiabulls
Financial Services (IBFSL), listed on the Bombay Stock
Exchange and the National Stock Exchange in
March2007. It entered the real estate sector in 2005
after it won two land parcels at auction bids of textile
mill land in central Mumbai. The company is focused on
development and sale of residential properties in tier-I
cities like the NCR, Mumbai and Chennai and rental of
commercial properties to be developed in Mumbai.
Recent developments
NIL
Valuation and view
Key investment arguments
Revived launch momentum has improved presales
in central Mumbai projects, which bodes for healthy
cash flow visibility.
IBREL's balance sheet is getting cleaner with steady
payment of IIDL liability and start of repayment
from EWT.
Introduction of dividend policy coupled with
recently concluded buy back bodes positively for
improving cash flow situation. The management
looks forward to maintain payout of 40% hereon.
after Dec-13, maintaining a steady payout of ~40%
hereon.
Company has operationally outperformed its regional
peers during down-cycle and accumulated a strong
asset base to benefit from demand revival. We
expect IBREL to enjoy healthy operating cash flow on
the back of revival in demand cycle and new launches
of ~6msf in FY15.
IBREL trades at 0.4x FY16E P/B (v/s 1.2x of MOSL
coverage universe average and IBREL’s historical
average of 0.75x and post FY08 maximum of 1.1x)
and 8.2x FY16E EPS. We value SOTP at INR160/share
and target price at 10% discount at INR145/share
(implied 9x FY16E cash EBITDA, 0.85x P/B). Maintain
Buy.
Comparative valuations
IBREL
P/E (x)
P/BV (x)
EV/Sales (x)
EV/EBITDA (x)
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
13.2
8.2
0.5
0.5
3.3
3.0
11.7
9.2
PEPL
21.1
14.7
2.5
2.2
3.6
3.0
12.5
9.5
Oberoi
19.8
11.3
1.7
1.5
7.3
4.2
13.4
7.4
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
5.9
9.4
Consensus
Forecast
8.5
10.6
Variation
(%)
-30.9
-11.6
FY14
FY15
Target price and recommendation
Current
Price (INR)
77
Target
Price (INR)
145
Upside
(%)
88.3
Reco
Buy
Shareholding pattern (%)
Jun-14
Promoter
DII
FII
Others
48.9
0.7
30.5
19.9
Mar-14
49.3
0.5
24.9
25.3
Jun-13
46.0
0.1
28.7
25.2
Stock performance (1-year)
25 July 2014
3

Indiabulls Real Estate
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
2014
17,362
33.5
5,404
31.1
210
5,194
2,213
637
0
3,619
1,315
36.3
2,304
2,304
31.3
-65
2,238
2015E
20,625
18.8
5,821
28.2
248
5,573
2,973
700
0
3,300
1,089
33.0
2,211
2,211
-4.0
25
2,236
(INR Million)
2016E
21,821
5.8
7,114
32.6
240
6,874
3,284
700
0
4,290
1,502
35.0
2,789
2,789
26.1
786
3,575
2017E
28,051
28.6
9,515
33.9
240
9,275
3,149
700
0
6,826
2,389
35.0
4,437
4,437
59.1
1,275
5,712
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)
2014
5.9
6.4
180.2
0.0
59.8
13.1
12.0
0.4
3.1
10.0
3.9
3.3
6.0
0.2
213.6
986.5
1098.3
0.4
2015E
5.9
6.5
182.5
0.0
59.9
13.2
11.9
0.4
3.2
11.3
3.9
3.2
6.2
0.2
188.8
1146.3
1047.0
0.5
2016E
9.4
10.0
187.8
0.0
43.7
8.2
7.7
0.4
2.9
8.9
5.2
5.1
7.1
0.2
187.4
1153.7
1211.9
0.5
2017E
15.0
15.6
194.2
0.0
35.2
5.2
4.9
0.4
2.1
6.3
6.5
7.8
9.1
0.3
153.1
994.4
1182.8
0.5
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
(INR Million)
2014
2015E
2016E
2017E
848
848
848
848
67,891 68,788 70,801 73,229
68,739 69,636 71,649 74,077
27,830 36,730 36,291 37,573
-1,202
-1,202
-1,202
-1,202
96,668 106,465 108,038 111,749
4,000
4,000
4,000
4,000
623
871
1,111
1,351
3,377
3,129
2,889
2,649
730
730
730
730
55,665 55,665 55,665 55,665
73,895 90,234 98,417 113,806
46,927 64,774 68,974 76,424
10,163 10,671 11,204 11,764
3,002
322
2,374
7,449
13,803 14,467 15,864 18,168
38,019 44,496 50,865 62,304
35,985 42,462 48,831 60,067
2,034
2,034
2,034
2,237
35,876 45,738 47,552 51,502
96,668 106,465 108,038 111,749
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
2014
3,619
210
0
2,213
1,315
-3,505
4,292
-642
-3,041
472
-3,210
-1,252
2,803
2,213
1,339
-2,214
-1,132
4,134
3,002
2015E
3,300
248
0
2,973
1,089
12,542
-8,684
-248
0
0
-248
1,364
8,900
2,973
1,339
6,251
-2,680
3,002
322
(INR Million)
2016E
4,290
240
0
3,284
1,502
-239
4,729
-240
0
0
-240
2,349
-439
3,284
1,562
-2,437
2,052
322
2,374
2017E
6,826
240
0
3,149
2,389
-1,124
6,481
-240
0
0
-240
2,009
1,283
3,149
2,009
-1,167
5,075
2,374
7,449
25 July 2014
4

Indiabulls Real Estate
NOTES
25 July 2014
5

Disclosures
This research report has been prepared by MOSt to provide information about the company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This
Indiabulls Real Estate
report is for personal information of the select 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 general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into
account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable
for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and
investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business
relationships with a significant percentage of the companies covered by our Research Department Our research professionals provide important input into our investment banking and other business selection
processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that
the research professionals who were involved in preparing this material may participate in the solicitation of such business. The research professionals responsible for the preparation of this document may
interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting market information. Our research professionals are paid in part based on the
profitability of MOSt which include earnings from investment banking and other business. MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from
maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an
officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading
strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with
the recommendations expressed herein. In reviewing these materials, you should be aware that any or all o the foregoing, among other things, may give rise to real or potential conflicts of interest . MOSt and
its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in
any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or
lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.
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. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the
data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not
intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor 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.
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
Analyst ownership of the stock
INDIABULLS REAL ESTATE LTD
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)
For U.K.
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.
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.
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.
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:
Anosh Koppikar
Kadambari Balachandran
Email:anosh.Koppikar@motilaloswal.com
Email : kadambari.balachandran@motilaloswal.com
Contact(+65)68189232
Contact: (+65) 68189233 / 65249115
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
For U.S.
For Singapore
Motilal Oswal Securities Ltd
25 July 2014
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
6