CRISIL retains valuation grade of 5/5 to Ashiana Housing

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CRISIL retains valuation grade of 5/5 to Ashiana Housing

CRISIL Research has come out with its report on Ashiana Housing. The research firm has maintained the fundamental grade of 4/5 to the company in its February 3, 2012 report.

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Ashiana Housing BSE | NSE 30/05/12 Are Mutual Funds betting on Ashiana Housing?

CRISIL Research has come out with its report on Ashiana Housing . The research firm has maintained the fundamental grade of 4/5 to the company in its February 3, 2012 report.

Ashiana Housing Ltd's (Ashiana's) Q3FY12 results exceeded CRISIL Research's expectations. Revenues exceeded expectations due to higher than expected revenue recognition in some of the key projects. Margins, however, were below expectations due to increase in raw material costs. We remain positive on Ashiana given its distinct business model, low gearing and its strong brand in the affordable housing segment. Further, acquisition of land bank of ~25 acres (1.7 mn sq.ft.) has enhanced future visibility. We raise our earnings estimates and maintain the fundamental grade of 4/5.

Q3FY12 result analysis
• Revenues more than doubled y-o-y (down 5% q-o-q) to Rs 539 mn driven by healthy bookings and faster execution of the launched projects such as Rangoli Gardens (Jaipur) and Ashiana Aangan (Bhiwadi). Revenues from wholly-owned projects grew 130% y-o-y to Rs 532.4 mn. Bookings were marginally down q-o-q largely due to a seasonal/regional trend as many consider the 14 December - 14 January ('kamurta') period as inauspicious.

• EBITDA margins remained flat y-o-y at 32.3%. It improved by ~126 bps sequentially but was still below our expectation.

• PAT grew ~111% y-o-y to Rs 153 mn driven by robust revenue growth and increase in other income, though it was partially offset by lower margins and high interest costs. EPS was Rs 8.2 vs. Rs 3.9 in Q3FY11.

Key developments: Acquisition of ~25 acres boost visibility
• Ashiana recently acquired ~25 acres of land bank - 11 acres in Halol (near Vadodara, Gujarat) and 15 acres in Thada (Rajasthan). In FY12, the company has acquired total land bank of ~75 acres, which quells our earlier concern of limited revenue visibility.

• Following these acquisitions, Ashiana's project pipeline has increased to ~8.5 mn sq.ft.; in addition, it has ongoing projects for ~3 mn sq.ft.

Earnings estimates - revised upwards
Owing to strong bookings in Rangoli Gardens and expecting a healthy momentum, we have raised revenue estimates by 6% and 5% for FY12 and FY13, respectively. EBITDA margin estimates, however, have been lowered by 50 bps and 65 bps for FY12 and FY13, respectively due to raw material cost pressure. Aided by higher revenue growth, earnings estimates have been revised upwards by 4.3% to Rs 28.9 for FY12 and by 2.7% to Rs 29.5 for FY13.

Valuations: Current market price has strong upside
We continue to use the net asset value method for Ashiana and retain our fair value of Rs 205 per share. Given the current market price, this translates to a valuation grade of 5/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

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