Buy Ashiana Housing; target of Rs 183: Sushil Finance

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Buy Ashiana Housing; target of Rs 183: Sushil Finance

Sushil Finance is bullish on Ashiana Housing and has recommended buy rating on the stock with a target of Rs 183 in its February 10, 2011 research report.

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Sushil Finance is bullish on Ashiana Housing and has recommended buy rating on the stock with a target of Rs 183 in its February 10, 2011 research report.

"Ashiana Housing, during the quarter ended Q3FY11, Ashiana Housing's Revenue is down by 3.9% YoY and 9.3% QoQ to Rs 231.2 million. De-growth during the quarter was mainly because the threshold limit of 25% was not achieved in certain projects, thus resulting in no revenue recognition from the concerned projects. Also stoppage of work in the Lavasa hill city project where the company is developing a retirement resort added on to the muted performance for the quarter. Its Area booked increased by 67% YoY to 3.05 LSF. Higher booking was mainly contributed by the company's Rangoli Garden project which is at Jaipur. Area booked in Rangoli Gardens has increased by 38% QoQ to 2.5 LSF. Equivalent Area Constructed during the quarter has increased by 20% YoY and 34.3% QoQ to 3.17 LSF."

"The company's Realization for the quarter has decreased by 4.7% QoQ and 6% YoY to Rs 1954/SF. Quarterly variations are due to varying weights of different projects in different quarters. Rising share of contribution from Jamshedpur (low priced project) in the total bookings has led to a lower average weighted price per square feet in this quarter. Ashiana's Operating Profit is up by 13.6% YoY to Rs 58.9 million. Its Operating Profit Margin is up by 390bps YoY to 25.5%. The raw material cost has decreased by 16.9% YoY to Rs 114.5 million thereby increasing the margin at operating level. Its Net Profit is up by 23.3% YoY to Rs 72.4 million in Q3FY11. It's Net Profit Margin increased by 690 bps YoY to 31.3%. Increase in the Net Profit was mainly because of higher share of profit from partnership firms. Share of profit from partnership firms has increased by 87.2% YoY to Rs 24.9 million. The company's total saleable area stands at 7.1MSF, with area launched at 3.94 MSF and total area booked at 2.62 MSF (67% of launched area). With huge potential of Retirement Resorts, improved market conditions and larger bandwidth available with Ashiana, its bookings are expected to attain the mark of 12.5 LSF in FY11 from current 7.07 LSF (FY10). While the EAC is likely to increase to 12 LSF from current 10.2 LSF (FY10)."

"Ashiana Housing has reported mixed bag performance for Q3FY11. The company has seen robust rise in area booking during this quarter which is up by 67% YoY to 3.05LSF. Most of this higher booking comes from Rangoli Gardens for which revenue is not recognized in the current quarter. Thus we believe that the company is likely to see higher share of profits from the partnership firms going ahead. Keeping in mind the ongoing projects saleable area of 7.1MSF, EAC target of 12LSF and area booking target of 12.5LSF for FY11 coupled with impressive past performance we believe that the company is likely to grow at a CAGR of 24% for the next two years. We therefore maintain our positive stance on the company and change our rating from HOLD to BUY. However, keeping in mind the stalled construction in Lavasa and increase in the raw material cost we have downgraded our FY11 and FY12 earnings by 24% and 27.6% to Rs 20.7 and Rs 28.4 respectively, also revised the price target to Rs 175 down 4.4% from the earlier target of Rs 183," says Sushil Finance research report.

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To read the full report click on the attachment