Buy Puravankara Projects; target of Rs 155: PINC Research

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Buy Puravankara Projects; target of Rs 155: PINC Research

PINC Research is bullish on Puravankara Projects and has recommended buy rating on the stock with a target of Rs 155 in its February 13, 2012 research report.

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PINC Research is bullish on Puravankara Projects and has recommended buy rating on the stock with a target of Rs 155 in its February 13, 2012 research report.

"Puravankara Projects (PVKP) reported a topline of Rs1.9bn; ahead of our estimate of Rs1.8bn but down 2% QoQ. EBITDA margins at 23.3% fell 92bps QoQ and were well below our estimate of 26.8%. Fall in margins was mainly on account of higher advertisement expenses. PAT at Rs320mn was up 20.6% QoQ and 15.3% above our estimate. Going forward the key focus of the company would be to 1) Launch new projects of ~17msf (30-40% to hit ground) over the next 12-18 months and 2) reduce debt level from the current Rs12bn through operational cash flow and also via land monetisation if needed. We maintain our 'BUY' recommendation on the stock with a target price of Rs155."

"PVKP reported a topline of Rs1.9bn; ahead of our estimate of Rs1.8bn but down 2% QoQ. However, sales volume fell to 0.45msf v/s 0.73msf in Q2FY12. Fall in sales volume was on account of absence of launches during the quarter. Average realizations however increased to Rs3,572psf from Rs2,608psf in Q2FY12 because of higher contribution from the Puravankara brand and increase in selling price of projects. EBITDA margins at 23.3% fell 92bps QoQ and were well below our estimate of 26.8%. Fall in margins was mainly on account of higher advertisement expenses. PAT at Rs320mn was up 20.6% QoQ and 15.3% above estimate. We believe going ahead margin is likely to improve due to better operational efficiencies and via improvement in realisation from sale of completed inventory. (Of the total 23.56msf of area under development, 53% inventory is left to be sold which is 80%+ completed) The company is looking to reduce debt over the next 6-12 months via 1) Launch of projects of ~17msf (30-40% to hit ground) over the next 12-18 months especially in Bengaluru (C.V.Raman Nagar, Venkatapura, Chokanahalli), 2) land monetisation to garner higher cash inflow and 3) improvement in operational cash inflow (CFO for 9MFY12 at Rs1.3bn as against Rs0.62bn for 9MFY11)."

"We maintain our 'BUY' recommendation on the stock with a target price of Rs155. At CMP of Rs76, the stock discounts FY12E/FY13E EPS of Rs8.3/Rs12.8 by 9.1x/5.9x. We have introduced FY14 numbers in this report," says PINC Research report.  

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To read the full report click on the attachment