Buy Ganesh Housing Corp; target of Rs 289: Sushil Finance

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Buy Ganesh Housing Corp; target of Rs 289: Sushil Finance

Sushil Finance is bullish on Ganesh Housing Corporation and has recommended buy rating on the stock with a target of Rs 289 in its March 7, 2011 research report.

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Sushil Finance is bullish on Ganesh Housing Corporation and has recommended buy rating on the stock with a target of Rs 289 in its March 7, 2011 research report.

"Ganesh Housing Corporation, During the quarter ended Q3FY11, Ganesh housing's revenue is up by 7.8% YoY to Rs 324.9 million. The company has booked an area of ~2LSF during the quarter. Majority of the booking has come from the company's residential project Maple County II project. It currently has ~662 Acres (24.4MSF) of land under development which is likely to provide immense growth to the company. This area under development includes - Integrated township- Smile City, IT/ITES SEZ, Residential, Commercial, Retail and Hotel. Million Minds accounts for 56.6% of the saleable area followed by Smile City accounting for 37% of it."

"Ganesh housing has launched the GCP Business Centre in Q3FY11 at vijay cross roads of 1.13LSF. This building is 95% ready and the company has seen a booking of 28,000 SF for the project. The company would start accounting for its revenue from Q4FY11. It would be launching two residential project located at Satelite, Ahmedabad of 300,000SF in Q4FY11. The company is likely to fetch in revenue of ~Rs 159 crore from this project at a cost of Rs 97 crores. The project is likely to be completed by March 2013. Its Operating Profit is down by 20% at Rs 177.5 million with an Operating Profit Margin of 54.6% which is down by 1894bps YoY. De-growth in the Operating profit was mainly because of higher project cost. Its project cost has increased by 97.2% mainly because of faster progress in construction activity of all ongoing projects."

"PIL's Net Profit is down by 69% YoY to Rs 60.3 million in Q3FY11. It's Net Profit Margin decreased by 4606 bps YoY to 18.6%. De-growth in Net Profit was mainly because of higher interest, financial charges and tax expense.The company has seen a 100% increase in its interest and financial charges to Rs 76.3 million. It has accounted for a one-time forex loss of Rs 2.5 crore in the current quarter. Its tax expense has also increased significantly to Rs 38.5 million for the quarter. Going ahead it is likely to see a tax expense as percentage of PBT as ~25% for FY11 and ~30% for FY12. For the 9MFY11, the company's revenue is up by 58.3% YoY to Rs 1049.1 million. The operating profit is up by 26.7% YoY to Rs 623.4 million with an operating profit margin of 59.4% down by 1480 bps. Its Net Profit is up by just 3.4% YoY to Rs 320.7 million with a Net Profit Margin of 30.6% down by 1621 bps."

"Ganesh Housing has come out with dismaying set of numbers for the quarter ended Q3FY11. It has so far developed 16.7 MSF in the past, and is likely to further develop 24.46 MSF of area in the next 8-10 years. Even with such a huge chunk of land in hand its gross debt/equity ratio has never crossed 0.2x. GHCL has off lately successfully launched 4 residential projects, one in every quarter, seeing a very good response and is likely to launch two more projects in the current quarter. However taking into account higher interest and tax expense along with delay in revenue recognition we have reduced our FY11 and FY12 EPS by 34% and 29.8% to Rs 14 and Rs 26.3 respectively. However, considering the robust cashflows likely to be accrued from the ongoing projects we maintain our BUY recommendation on the stock with a NPV based target of Rs 289," says Sushil Finance research report.

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