Hold Unitech; target of Rs 39: KRChoksey

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Hold Unitech; target of Rs 39: KRChoksey

KRChoksey has recommended hold rating on Unitech with a target of Rs 39, in its June 13, 2011 research report.

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KRChoksey has recommended hold rating on Unitech with a target of Rs 39, in its June 13, 2011 research report.

"Unitech's consolidated revenue stood at Rs. 1,054 crore in Q4FY11, against of Rs. 660 crore i.e. 60% growth QoQ, while 4.8% decline YoY. The company booked ~2 msf in Q4FY11 against 2.2 msf in Q3FY11 (i.e. 10% de-growth QoQ). Average realizations for residential projects in Q4FY11 stood at Rs. 4,341 psf against Rs. 4,656 psf in Q3FY11; while average realization improved 8% over the last 3 quarters. Unitech's revenue for the year FY11 was Rs. 3,187 crore against Rs. 2,931 crore in FY10 which is 8.7% growth YoY. The company booked about 9.2 msf of sales for FY11 missing its guidance of 10 msf."

"Company's consolidated EBIDTA stood at Rs. 169 crore in Q4FY11 against Rs. 209 crore in Q3FY11, decline of 19.3% QoQ and 32% decline YoY. This was primarily due to increase in construction cost which was Rs. 841 crore in Q4FY11 against Rs. 432 in Q3FY11 and Rs. 829 crore in Q4FY10. Employee cost too increased to Rs. 45 crore in Q4FY11 against Rs. 29 crore in Q3FY11 and Rs. 26 crore in Q4FY10. Rise in input cost hampered the EBITDA margins significantly, EBITDA margin in Q4FY11 was 16% against 31.6% in Q3FY11 and 22.4% in same period previous fiscal. Rising input cost is a cause of concern going forward which will put pressure on the margins in the coming fiscal. Other income increased significantly to Rs. 42 crore in Q4FY11 against Rs. 18 crore in Q3FY11. The net profit was Rs. 103 crore in Q4FY11 against Rs. 111 crore in Q3FY11 i.e. 8% decline sequentially. Net profit margins were almost half at 9.7% in Q4FY11 against 17% in Q3FY11. EBITDA for FY11 was Rs. 924 crore against Rs. 1,071 crore in FY10 i.e. 14% decline YoY. EBITDA margins de-grew 755 bps QoQ to 29% in FY11. Net profit in FY11 stood at Rs. 567.6 crore against Rs. 675 crore in FY10 which 16% decline on yearly basis."

"Of the total sales in Q4FY11 the company sold 49% in Gurgaon, 19% in Noida & Greater Noida, 11% in Chennai, 10% in Kolkata and remaining 10% in other cities. On the delivery front Unitech delivered 1.3 msf in Q4FY11. Unitech launched 10.44 msf in Q4FY11 it included 3.9 (37%) msf in Gurgaon, 2.15 msf (21%) in Noida & Greater Noida, 1.37 msf (13%) in Chennai, 1.33 msf (13%) in Kolkata and 1.74 msf (17%) in other cities of the country. On the leasing front the company leased 4 msf in February 2011 as against 3.26 msf in June 2010."

"We expect Unitech to remain aggressive in its launches in the affordable and mid housing segment. The company will continue its focus on reducing its debt and also raise funds for ongoing projects, the debt levels are expected to drop further going ahead with improved cash flows. We recommend 'HOLD' on the stock with target price of Rs 39 per share by assign P/BV multiple of 1.3x to its FY13 P/BV of Rs. 29.7 per share. (BV discount to peers on the back of ongoing controversy of Uninor in the 2G scam)," says KRChoksey research report. 

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