October 28, 2015 / 17:35 IST
Motilal Oswal's research report on Indiabulls Real Estate
Indiabulls Real Estate revenue declined 19% YoY to INR6.1b (v/s our estimate of INR6.7b). EBITDA declined 28.5% YoY to INR1.3b and EBITDA margin was 21.9% (v/s 22% for FY15). PAT doubled YoY to INR750m, boosted by higher other income.
Gain in comfort on asset monetization key to re-rating: IBREL trades at 0.4xFY16E and 0.4x FY17E BV, and at 10x FY16E and 7.4x FY17E EPS – steep discount to peers and own valuation history (average P/B of 0.75x). Key concerns are operational weakness in core regions (Central Mumbai and Gurgaon) and discomfort on London asset. Divestment of stake in London asset (as per media reports) at healthy valuation, coupled with success in de-leveraging target would be key triggers. We value IBREL at INR120/share. Buy; our target price is INR 88 (25% discount to NAV) – 29% upside.
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