HDIL Q2 PAT seen down 6% at Rs 201 cr

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Real estate developer Housing Development and Infrastructure (HDIL) is expected to report a profit after tax of Rs 201 crore in the second quarter of FY12, a fall of 6% as compared to Rs 213.8 crore in the corresponding quarter of last fiscal.

Net sales are seen going up 33% to Rs 495.5 crore from Rs 372.7 crore during the same period.          

EBITDA is likely to go up 4% to Rs 247.8 crore in the July-September quarter of FY12 versus Rs 237.2 crore in a year ago period.

EBITDA margins are expected to be at 50% versus 63.6% year-on-year.

On quarter-on-quarter basis, net sales are likely to fall 3% while PAT is seen going up 6%.

Factors to watch:

TDR volumes likely to come in lower:

Over the past couple of quarters HDIL has consistently booked revenues from asset sales

Likely to recognize approximately Rs 340 crore from asset sale in this quarter as well

TDR volume is likely to decline, given low inventory and lower construction velocity during Q2

TDR volumes will be marginally lower sequentially for Q2FY12 on account of monsoons and a difficult demand environment as the TDR market continues to remain weak and likely to start reflecting in the prices going ahead

HDIL is expected to report 0.6 mn sqft of TDR sales at Rs 2,500/sq ft as versus 0.65 mn sq ft at Rs 2,500/sq ft in Q1FY12 and 1 msf in Q2FY11; average price - Rs 2,400psf

HDIL's revenue will be largely driven by FSI sales at Goregaon and Virar/Vasai:

Earnings will be substantially dependent on the FSI sale as was the case in the last quarter where 65%-70% came from asset sale which is a worrying sign

On a QoQ basis revenues are likely to fall on lower FSI sale revenue recognition as revenue from the development projects are expected to kick in from 2HFY12

FSI sales in Vasai and Virar would account for a meaningful share of revenue

HDIL has unbooked revenue from Goregaon FSI sale of approximately Rs 320 crore likely to be recognized in the remainder of FY12

Expect partial recognition of its FSI sales in Goregoan projects by revenue contribution from Andheri will fall QoQ as almost the entire payment was recognized in the previous quarters

Reduction of Debt:

Has been de-leveraging its balance sheet through FSI sales

At the end of Q1FY12, debt on a consolidated basis had reduced to Rs 4,179.98 crore, showing a decrease of around 3.23% on a QoQ basis. It is likely to further repay debt in this quarter

HDIL has intended to reduce debt and improve cash flows HDIL

Has been trying to bring down its cost of debt by reducing higher interest rate near term debt with longer term NCDs

Were targeting repaying Rs 800 crore-1,000 crore of debt in the coming three quarters of FY2012