Research Team recommends Mahindra Lifespace Developers at
current price with a target price of Rs 455, Power Grid Corporation at current
price with a target price of Rs 131, Container Corporation of India at current
price with a target price of Rs 1,050, Gateway Distriparks at current price
with a target price of Rs 190.
Trade
|
Mahindra Lifespace Developers
|
1,666
|
408
|
455
|
12%
|
Buy
|
|
Power Grid Corporation
|
52,802
|
113
|
131
|
16%
|
Buy
|
|
Container Corporation of India
|
11,880
|
917
|
1,050
|
14%
|
Buy
|
|
Gateway Distriparks
|
1,496
|
139
|
190
|
37%
|
Buy
|
Rationale for the
Investment Ideas
Mahindra Lifespace Developers
Valuations & Outlook
Even though execution and approval delays have impacted the
financial performance of the company, we believe that challenges are now
deteriorating. The company is well placed to leverage on the ongoing projects
and available land bank as at least 3 projects are expected to hit the revenue
recognition threshold in the current quarter. We have valued the company on a
SOTP basis to arrive at a NAV of Rs. 455 per share. Thus we maintain a BUY on
the stock for a target price Rs. 455.
Highlights
Successful launches and healthy sales from ongoing projects:
The company successfully launched 2 projects in the current quarter viz
Aqualily Apts C1 in Chennai and Antheia – Phase 1 in Pune. Sales from the
existing residential projects also remained healthy with the company managing
to sell 0.21msf (146 units) against 0.16msf (106 units) in the previous
quarter.
Pune Project was received favorably and Hyderabad is
awaiting final approval: Pune residential project (Antheia – Phase1) was
launched in the current quarter with a Total Development Area of 0.22 msf. The
project received an encouraging response as 22% units were sold in the current quarter
itself. The Hyderabad project has also received key approvals with the
management confident of a launch in November 2012 after getting the final
approvals for the project.
Traction on approvals front but trend on execution remains
weak: The management acknowledged traction on the approvals front which enabled
them to successfully launch a project in Pune apart from the launch of Aqualily
Apts C1 in Chennai. However, trends on the execution front were a matter of
concern during the current quarter as issues w.r.t. labour availability and
contractor performance affected the financial performance. Moreover, high court
issue w.r.t. water availability also remained a drag on the operational
performance.
Addition of land parcels continue: The management added a
land parcel in Alibaug to the tune of 0.23 msf thus increasing the total land
bank added in H1 FY13 to over 1 msf. Apart from this, the company has ~4.5 msf
worth of land bank undergoing title due diligence. With additions in Alibaug
and Hyderabad, the company is now diversifying and adding on to its land bank
for future growth.
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