Buy HDIL, target Rs 698: Emkay Global

Emkay Global Financial Services research has maintained buy rating on HDIL with target price of Rs 698 in its July 21, 2008 report. "Housing Development and Infrastructures Ltd. (HDIL) reported its Q1FY09 results which were in line with our expectations on the revenue front and higher than expectation on the bottom-line. Revenue for the quarter stood at Rs .5.7 billion as compared to Rs 4.4 billion during Q1FY08. The company booked revenue at commercial property at Bhandup, SRA project at Santacruz and residential project at Bandra (W). Operating profit during the quarter stood at Rs 4.6 billion which represents growth of 96.5%. Increase in inventory substantially declined from Rs 22.5 billion in Q4 FY08 to Rs 3.4 billion in Q1 FY09, primarily due to decline in the land bank payment that the company made in Q1FY09 as compared to Q4FY08. Interest cost increased from Rs 681.5 million in Q4FY08 to Rs 1.4 billion in Q1FY09."

"The company had raised debt during the end of the fourth quarter which is why the interest cost increased substantially when compared sequentially. Net profit registered growth of 56.8% to Rs 3.1 billion, primarily due to lower effective tax rate of 5.7%. We expect the company to report net profit of Rs 18.9 billion in FY09 and Rs 24.2 billion in FY10. We maintain our target price of Rs 698, 20% discount to out NAV of Rs 873" according to Emkay Global report.  

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