Buy Mahindra Lifespace; target Rs 480: Motilal Oswal

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Buy Mahindra Lifespace; target Rs 480: Motilal Oswal

Motilal Oswal is bullish on Mahindra Lifespace Developers and has recommended buy rating on the stock with a target of Rs 480 in its July 25, 2011 research report.

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RELATED NEWS Sell ACC; target of Rs 948: Aditya Birla Money Buy Agro Tech Foods; target of Rs 454: Firstcall Research Buy Biocon; target of Rs 480: Unicon Investment ALSO READ See previous views by Motilal Oswal See what other Experts & Brokerages are saying about Mahindra Life See messages about Mahindra Life Mahindra Life BSE | NSE 30/05/12 Are Mutual Funds betting on Mahindra Life?

Motilal Oswal is bullish on Mahindra Lifespace Developers and has recommended buy rating on the stock with a target of Rs 480 in its July 25, 2011 research report.

"Mahindra Lifespace Developers, standalone revenues increased 19.9% YoY to INR 815m and net profit grew 18% YoY to INR 171m. A sharp QoQ drop (~50%) in revenue is largely due to lower new launches over the past couple of quarters, which resulted in muted incremental recognition. MLIFE's consolidated revenue was INR 1b, up 26% YoY against INR 0.8b in 1QFY11 and consolidated net profit grew 14% YoY to INR 142m against INR 125m in 1QFY11. In 1QFY12 MLIFE's standalone EBITDA grew 6% YoY to INR172m and EBITDA margin was 21.2% (against 24.6% in 4QFY11). The drop in EBITDA margin was attributable mainly to declining revenue contribution from almost completed Mumbai projects and the revenue mix being skewed towards lower margin non-Mumbai projects in the NCR and Pune."

"1QFY12 has been the second consecutive quarter of muted new launches. The company launched only one project, Aura Phase 3 (~0.2msf) in the NCR at a sale rate of INR 4,000/ square foot (25% higher than INR 3,175/square foot in Aura Phase 2). Despite a sharp upward revision in price, the project had ~85% absorption. The company also soft-launched Royal Ivy (GE Garden, Mumbai) at ~INR 10,000/ square foot in June 2011. In 1QFY12 MLIFE sold ~0.34msf (INR 1.7b) against 0.15msf (INR 0.9b) in 1QFY11. The sales volume includes ~0.16msf in Aura Phase 3 and 0.05msf in Mumbai projects. The stock trades at a ~34% discount to our SOTP value of INR 564, 10.9x FY12E EPS of INR 33.7 and 7.6x FY13E EPS of INR 48.9. Maintain Buy for a target price of Rs 480," says Motilal Oswal research report.

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To read the full report click on the attachment