Sunidhi Securities is bullish on Puravankara Projects and has recommended buy rating on the stock with a target of Rs 120 in its April 5, 2013 research report.
“Established in 1975, 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. Puravankara has a significant presence in Bangalore, Kochi, Chennai, Coimbatore, Hyderabad, Mysore and overseas in the UAE, Saudi Arabia and Sri Lanka.”
“During Q3FY13, consolidated net profit surged 101.3 percent to Rs64.4 crore on 56.5 percent higher revenue of Rs302.3 crore. OPM and NPM stood at 53.1 percent and 21.3 percent against 48.2 percent and 16.6 percent respectively in Q3FY12. Consolidated EPS for Q3FY13 stands at Rs3.0. During 9MFY13, consolidated net profit advanced 83.5 percent to Rs164.6 crore on 41.5 percent increased revenue of Rs819.7 crore. OPM and NPM stood at 50.2 percent and 20.1 percent against 47.1 percent and 15.5 percent respectively in 9MFY12. Consolidated EPS for 9MFY13 stands at Rs7.7. During FY12, PPL sold 3.1 million square feet of projects as compared to 2.4 million square feet in the earlier year. While the volume in terms in number of units was going up, PPL was not able to pass on the price hike. PPL received excellent response from its recently launched (Provident Sunworth and Purva Sunflower) projects in Bangalore (in Q4FY13). In Provident Sunworth, it sold 700 apartments (total sales value of Rs250 crore) in the first 10 days of launch. Further, it is likely to launch two projects in Mangalore and Coimbatore in the affordable segment in Q4FY13. The sustainable business model has helped PPL to combat turbulent times, currently witnessed by the entire real estate industry helping it to protect margins and adhere to reasonable realization rates.”
“PPL believes that in a country where the demand for realty space will be in excess of supply for a number of years, realty companies will need to respond with a specific business model that makes it possible to grow on a sustainable basis – resist declines better than the broad industry and report a quicker rebound during industry recoveries. PPL expects to record sales in excess of 3 million sq. ft. by the end of FY 2013, with significant contribution coming from the launches of Provident Sunworth and Purva Sunflower. Additionally, five more projects are expected to be launched in Q4 March 2013.
PPL, which launched its affordable housing subsidiary in 2008, has its presence in the real estate markets in Bangalore and Chennai. The firm is also planning to launch similar initiatives in Mumbai, Delhi, Hyderabad, Coimbatore, Mysore, Pune, Baroda, Ahmadabad, Kolkata, Nagpur and Jaipur.”
“Going ahead, PPL foresees a churn within its residential portfolio: faster growth coming out of its Provident brand, increasing from the ongoing 41 percent of its overall revenues to an estimated 50 percent by 2013-14. While affordable housing projects earn lower margins, there has been a strong volume growth potential in this segment. PPL intends to grow its presence in the mid-segment of India's growing commercial space market (Class A) and intend to grow its presence in the middle and upper segments of India's retail segment. PPL believes that true competitiveness in the realty industry can be derived from efficient project execution, which reconciles knowledge, capability, equipment, processes, standard operating procedures and information technology to deliver projects quicker than the industry average. PPL has new launches planned in the coming years especially in Mumbai, Delhi and other prime cities, which will increase its overall presence to multiple locations.”
“Additional deduction of interest upto Rs1-lakh for a person taking first home loan upto Rs25 lakh during period FY13 to FY14 proposed in the Union Budget for FY13-14 is highly beneficial to the real estate sector. PPL’s active focus on the mid-income (affordable premium) segment, signs of strength in its primary market of Bangalore and project pipeline in multiple geographies coupled with PPL’s initiatives to reduce the debts going forward make the stock an attractive buy. At the current market price of Rs90, the share is trading at a P/E of 9.3x on FY13E and 7.3x on FY14E. We recommend BUY with a target price of Rs120 in the medium term,” says Sunidhi Securities research report.
Institutional holding more than 40% in Indian cos
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