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Mar 01, 2013, 05.11 PM IST | Source: Moneycontrol.com

Buy Puravankara Projects; target Rs 123: Magnum

Magnum Research is bullish on Puravankara Projects (PPL) and has recommended buy rating on the stock with a target price of Rs 123, in its February 27, 2013 research report.

Magnum Research is bullish on Puravankara Projects (PPL) and has recommended buy rating on the stock with a target price of Rs 123, in its February 27, 2013 research report.

"PPL is a real estate developer with a key focus on residential constructions having presence across major cities in South India including Bengaluru, Kochi, Chennai, Hyderabad, Kolkata and Colombo. PPL has also incorporated a wholly owned subsidiary, Provident Housing Ltd, to cater to the growing demand for mid-segment housing.

The company also has a sales and marketing office in the UAE and representatives in the UK and the USA. With increasing interest among Indians in Saudi Arabia to invest in luxury and affordable luxury homes in India, PPL ventured into Saudi Arabia (in June 2012) to cater to the housing needs of Non- Resident Indians in the country.

PPL has the distinction of being the first to obtain FDI in the Indian real estate industry through its joint venture with Singapore based Keppel Land Limited, the property arm of the 54% government owned conglomerate, Keppel Corporation Limited. They are currently developing two projects in Bengaluru and Kolkata.

We expect PPL to witness healthy top-line growth of 37.2% CAGR from Rs 810.4 crore in FY12 to Rs 2,091.5 crore by FY15E on the back of new project launches and readily available inventory. We believe that this acceleration is achievable owing to the occupancy in Bangalore market, which is expected to remain high in the range of 85-90% over the next five years supported by the IT sector growth. PAT is expected to grow at a CAGR of 57.8% to Rs 533.2cr. At CMP of Rs 100.00, it is trading at an adjusted P/BV of 1.0x FY14E BV. We have valued the PPL at P/BV of 1.2x FY14E & maintain our BUY rating on the stock with a target price of Rs 123," says Magnum research report.

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