Buy HDIL; target of Rs 115: Angel Broking

Angel Broking is bullish on  Housing Development and Infrastructure and has recommended buy rating on the stock with a target of Rs 115 in its August 16, 2012 research report.

“Housing Development & Infrastructure Ltd (HDIL) has established itself as one of India's premier real estate development companies. HDIL is also the largest slum rehabilitation company, with significant operations in the Mumbai Metropolitan Region. The company has completed more than 100mn sqft of construction in all verticals of real estate and has rehabilitated around 30,000 families in the past decade. The company's operations range from residential, commercial and retail projects to slum rehabilitation and land development.”  

"HDIL’s 1QFY2013 results were below our expectations on account of no transferable development rights (TDR) sales due to low inventory and all the sales coming in from the high margin floor space index (FSI) sale in Vasai- Virar (realization of Rs 1200/sqft). There were no FSI sales from the Guru Ashish project during the quarter. The management expects 1.5-2mn sqft of FSI sales per quarter going forward. Revenues decreased 60% yoy and 68% qoq to Rs201cr (vs our estimate of Rs 552cr) on account of no TDR sales and all the sales coming in from the high margin FSI sale in Vasai- Virar. The EBITDA margin came in at 78.4%, up from 53% yoy owing to higher margin FSI sales. Consequently, the operating profit stood at Rs158cr, down 40.7% yoy and 40.4% qoq. The tax rate for 1QFY2013 stood at 16.0% (26.6%); the PAT de-grew 50% yoy and 67% qoq to Rs105cr.”

“We believe that HDIL could outperform on the back of an improving approval scenario in the city and successful new launches which are expected over the coming months, which would further improve its balance sheet. At Rs 84, HDIL is trading at 0.3x and 0.28x on our FY2013E and FY2014E book value estimates, which seems cheap given the RoE profile of the company (FY2013E- 8.8%, FY2014E-9.4%). We maintain Buy on HDIL, with a target price of Rs115,” says Angel Broking research report.

Institutional holding more than 40% in Indian cos

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