RealEstate Ideas1st PDF

Real Estate Sector Report
Expect BSE Realty Index to cross 2008 highs, over 300% increase from current levels
August 13, 2010

1. Current scenario
2. Demand
3. Why the real estate stocks have been beaten down by the investors?
4. The transient irrationality
5. Why is the Indian real estate sector different from the rest of the world?
6. The emerging trend
7. Appendix
www.ideasfirst.in
August, 2010

Industry
1. Current scenario
The real estate sector has witnessed a strong bull run over the last few years starting 2004, before plunging
in second half of 2008. With the rapid economic growth in the country, the income and surpluses in the
hands of the people suddenly increased. Real estate being one of the only two perennial & traditionally
preferred asset class and with the inborn desire of Indians to own a house, the sector became a natural
choice for these excesses to be invested. This sudden spurt in demand caught the fancy of investors
globally.
Real estate sector was one of the key beneficiaries of the foreign fund inflows or hot money. However with
the global crisis in 2008, this very fact went against the sector. Also, the crisis had its genesis in real estate
sector and as a result the real estate stocks took a steep plunge across all the countries, including India,
even though Indias real estate market was safe and didnt face proportional impact. The sudden
disappearance of the liquidity and the fear in investors minds resulted in steep fall in demand. Real estate
companies in India which had taken huge leveraged positions for expansion in anticipation of booming
demand saw their market cap erode quickly and had to hold projects due to negative cash flows. The share
prices of these companies have fallen to unjustified levels even though the long term fundamentals of the
Indian real estate sector havent changed.
While economic growth returned and the markets improved beginning the first quarter of 2009, rationality
has not come back to the real estate stocks. Though other sector indices have appreciated many folds over
the past one year, the BSE realty index continues to under perform the broader market by a wide margin.
This despite the fact that property prices are almost nearing and in fact even crossed their 2008 peaks in
most places. Further demand has returned to the sector now and projects are being sold out within days of
their launch. It is encouraging to know that even the demand for premium housing is growing fast. Most
importantly the debt position and balance sheet of real estate companies have improved significantly over
the past two years. This disconnect in high property prices and low realty stock prices can be attributed to
the unwarranted fear of fall in housing demand due to the anticipated interest rates hike and the fragile
economic milieu in the western countries and their weak real estate stocks. As we discuss later, based on
Indias and the sectors long term fundamentals we believe the Indian real estate sector is in a secular bull
run and currently smartly recovering out of the cyclical bear run.
www.ideasfirst.in
August, 2010

2. Demand
Even though post crisis the real estate sector has taken a major hit, fundamentally things have only
improved. Based on our top down approach and our strong macro view of the Indian economy we
believe the Indian real estate sector is in a multiyear, stable growth phase. Following are a few of the
key points that make us confident on the sector.
2.1. Domestic consumption story

We believe that the growth matrix in India has never been better. With a focused, pro reform and a
stable government at the center, there is no stopping for India. Even though the global economy is
going through an unusually uncertain phase, we believe that over medium to long term the
fundamentals would prevail and see a limited impact of the global developments on the real sector
in case of a negative fallout. . Unlike most other sectors, real estate is a pure domestic theme which
is produced, consumed & sold domestically; global developments in US, Europe, China; et al have
only an indirect impact on demand through confidence and capital channel. Its surprising to see
that while all experts & financial gurus are stressing to invest in Indian domestic demand driven
sectors, real estate has been given a total miss.
We expect the real estate sector to grow step-in-step with the fast growing GDP. A large part of
the savings is expected to flow into real-estate for the twin purpose of having own abode and
making a stable investment.
2.2. Demographics
2.2.1. Working age population
In contrast to the aging population and rising dependency ratios in many countries, India is
blessed with a young and growing population. India has amongst the best demographic
ratio globally and this would continue to improve over next three to four decades. This
comes at a time when western economies have deteriorating demographic ratio. Even
China is at fag end of its favorable demographic ratio which is expected to peak between
2012 & 2015 and decline sharply thereafter for next few decades. While demographic
dividend is a double edge sword, if handled in a right way it can be hugely positive for a
country. The rising proportion of persons of working age will stimulate savings as pressure
on household and public budgets for the needs of dependent children & elderly comes
down. Young workers are comparatively more mobile who are willing to take chances and
ready to migrate where opportunity is available. The rapidly growing work force implies
growing savings leading to higher demand for housing.
2.2.2. Exploding Middle Class

McKinsey Global Institute (MGI) predicts that the Indias middle class will reach 583 million
from the current 50 million by 2025. Further it states that the average household income in
India will triple over the next two decades and it will become the worlds 5th-largest
consumer economy by 2025, up from 12th now. Another study shows that according to
Indian standards, the middle class population in India is already more than the total
www.ideasfirst.in
August, 2010

population of the United States. With this exploding middle class the demand for real
estate is bound to go up unidirectionally.
2.2.3. Changing trend towards nuclear families

The traditional joint-family system in India is rapidly breaking up. With increasing
expenses and with more people migrating to cities for work, people are increasingly opting
for nuclear and small families. This undoubtedly means more demand for residential
segments.
2.3. Huge Surpluses

2.3.1. High savings
India is among the very few economies globally that has a high savings rate. A savings
rate of approximately 34% of GDP implies savings of USD 400 million annually.
Historically Indians have preferred two asset classes over others gold and real estate
and an increase in savings would directly lead to an increase in demand for these asset
classes. People in urban areas are increasingly investing in second homes too.
2.3.2. Parallel economy

The parallel economy or the black money as more commonly known in India is estimated
to be anywhere between 40 to 100 percent of the stated GDP. Property is the easiest and
most attractive place to park this huge amount of unaccounted funds. Cash component in
real estate deals has been a very common practice in India. Other than acting as an
invisible hand supporting the real estate market, the black or unaccounted component also
provides a cushion to banks financing the sector.
2.4. Growing Income

2.4.1. Increasing Employment
Barring the span of 12 to 18 months of the economic slowdown, the employment the
employment for both blue and white collared workers has been increasing in
India. With the strong economic recovery in India, companies have started hiring again.
This entails increase in demand for commercial space. Further this increase in work force
migration also means more housing requirement by these corporate.
2.4.2. Inclusive growth

There has been a notable shift in the growth in India towards a more inclusive growth.
As a result of the broader based growth and the redistributive measures by the
government, the surplus in the hands of the common man is fast increasing. The National
Rural Employment Guarantee Act (NREGA), the Sixth Pay Commission and the
governments increased focus on infrastructure would further boost the growth at the
www.ideasfirst.in
August, 2010

ground level. Moreover with manufacturing and service sector gaining traction in the rural
economy, the reliance on farm-based income has decreased substantially over the years
reducing the income volatility.
2.5. Urbanisation
Approximately only 30% of the total population or 340 million people reside in cities. McKinsey
Global Institute (MGI) predicts this number will go up to 590 million, in next 20 years. This addition
of 250 million to urban areas will be at a very rapid pace requiring only half the time compared to
the 40 years (1971-2008) needed to add the last 230 million to the urban population. Such rapid
urbanization would need to be supported by rapid development in real estate may it be residential,
commercial or hospitality.
Historically all developed countries have seen a boom in real estate specifically during their fastest
growing years characterized by rapid urbanization. A more recent parallel would be China, one of
the few countries to experience such high rates of urbanization. The real estate growth there over
the last decade gives a fair idea about the growth potential of the real estate sector in India.
2.6. Perennial investment destination

People in India have a natural tendency to save and are relatively more conservative when it
comes to investments. Even today majority of financially literate people park their surpluses in the
traditionally safe haven, real estate. Further the desire to own a home is relatively very high
amongst Indians, house being the first major asset purchased by a majority of them.
2.7. Low Mortgage to GDP ratio

The real estate industry in India is not driven by bank / non bank finance with bulk of the purchases
financed entirely from savings. The mortgage to GDP ratio in India continues to remain one of the
lowest globally with a very low penetration of housing loans. It is surprising to know that only about
30% of the total realty deals in the country are financed by financial institutions. This phenomenon
can partially be attributable to high savings, huge parallel economy, lack of financial knowledge
amongst the public and limited availability of credit facilities.
Interestingly high value properties are rarely financed by financial institutions, with the portion being
rd
financed usually limited to 1/3 of the total value. Rather it is the low cost housing sector that forms
bulk of the demand for finance.
However this situation is fast changing and the leverage ratio is improving more favorably. The
opportunity lies in the problem itself, offering a great upside to the real estate demand and prices as
the mortgages market grows.
www.ideasfirst.in
August, 2010

3. Why the real estate stocks have been beaten down by the investors?
While multiple reasons have been attributed to justify the disconnect between the high real estate prices and
low realty stock prices, we believe that its fear, fear and fear that is keeping investors away from the sector.
Listed below are the most common fears that we believe investors have in their minds. Need not say, that
these fears are unwarranted and do not hold in the Indian scenario.
3.1. Increase in Interest rates

The anticipated interest rate hike by RBI is one of the basic reasons driving the investors out of the
real estate sector. With the increase in cost of financing, investors believe that the demand for real
estate would dry up. However we believe that unlike in other countries, the rise in interest rate will
not have a significant impact on the demand of real estate.
being financed entirely from the savings. This can be easily deduced from its relatively low
mortgage to GDP ratio and the fact that only about 30% of the total realty deals in the country are
financed by financial institutions. Additionally, bulk of the demand is coming from the end user and
not just investors, which further mitigates the impact on demand.
3.2. Global crisis fears

The fragile recovery in the United States, the instability in the Euro zone and the fears of a property
bubble in China are depressing the realty market. However based on Indias strong macroeconomic
fundamentals and its limited exposure to the international market we expect only a mild, if any,
impact on Indias growth.
3.3. Many IPOs scheduled for launch

The IPOs scheduled by realty companies over the next few months are believed to be depressing
the current investment in the sector. We believe that given the low market value of the free float
stocks in the sector the scheduled IPOs will have minimal, if any impact on the demand over
medium to long term or once sentiments turn around.
www.ideasfirst.in
August, 2010

4. The transient irrationality

Many property stocks in India are currently trading at over 50% discount to their NAV and approximately
33% of their pre crisis peak price. However we feel this is mainly because of the global meltdown in property
prices and slowdown in China. Given the sectors domestic nature it wont be long before the investors
realize its true potential. Following are a few more points that highlight the disconnect between the
fundamentals and the stock prices
4.1. Real Estate prices nearing 2008 peak prices:

The real estate prices have moved up sharply after plummeting during the recent global economic
meltdown. Property prices are already nearing their 2008 peak prices and have even breached the
peak in some regions. However the stock prices of these real estate developers are yet to be
adjusted upwards.
4.2. Stronger balance sheets:

Pre crisis, most developers had taken huge leveraged positions in anticipation of the growing
demand over the coming years. However with the melt down in second half of 2008, their cash
flows deteriorated and balance sheets started bleeding. Debt levels had grown to unsustainable
levels. However these companies have put their house back in order by slowing down their
aggressive expansion plans, adopting a cautious and conservative strategy, and even selling their
land. Their debt position and cash flows are much more comfortable now. Consolidated debt
position of the sector as a whole is much lower now. Despite stronger financials their stock prices
continue to get the beating.
4.3. Business reviving smartly:

The sector has seen smart recovery in the business. Projects are being sold within days of their
launch and signs of demand revival are clearly visible. Despite this optimism fear persists in the
stock markets and investors continue to discount the stock prices for theses companies.
With an eye on the above three factors we see every reason for the realty sector to provide
exceptional returns from their current levels and believe the downside to be limited.
4.3.1. Proof
The signs of the revival of the sector are eminent. Projects are getting booked within days of
their launch. Further the aggression and optimism in the sector is clearly visible in the media.
Whether it is land purchase at multiple times of reserve price or the size and volume of their
advertisement in most renowned publications, you yourself can judge. These are indirect yet
significant indications of the boom ahead.
www.ideasfirst.in
August, 2010

5. Why is the Indian real estate sector different from the rest of the world?
The real estate sector in India is very peculiar owed majorly to its economic structure. These structural
differences make it vacuous to compare it with the real estate markets in other countries.
5.1. Perennial investment destination

People in India have an inborn tendency to save and are relatively more conservative when it
comes to investments. Even today majority of the people park their surpluses in gold and real
estate, which are traditionally considered as safe havens for investment. Further as compared to
people across the globe, the desire to own a home is relatively very high amongst Indians, house
being the first major asset purchased by a majority of them. This habit of Indians provides strong
support to the demand.
5.2. Parallel economy

The parallel economy or the black money as more commonly known in India is estimated to be
anywhere between 40 to 100 percent of the stated GDP. This huge surplus has limited avenues
other than property markets to be invested in and cash component in real estate deals is a very
common practice in India. It also reduces the financing requirement. Other than acting as an
invisible hand supporting the real estate market, the black or unaccounted component also
provides a cushion to banks financing the sector.
This invisible force which gets even more active during slow periods is very peculiar to the Indian
economy and a major factor why the countrys real estate sector cannot be paralleled against any
other country.
5.3. Low Mortgage to GDP ratio

being entirely financed from savings. The mortgage to GDP ratio in India continues to remain one
of the lowest globally with a very low penetration. It is surprising to know that only about 30% of the
total realty deals in the country are financed by financial institutions. This phenomenon can partially
be attributable to higher savings, huge parallel economy, limited availability of credit facilities and to
some extent lack of knowledge.
Interestingly high value properties are rarely financed by financial institutions, with the portion being
rd
financed limited to 1/3 of the total value. Rather it is the low cost housing sector that forms bulk of
the demand for finance.
The low dependence on the financial sector again differentiates the Indian realty sector form the
sector across the world.
5.4. Difficulty in getting clear title land

This is probably the most important differentiator for the sector. It is very difficult to get a clear title
land in India. Further legal complications involving real estate deals take years to be resolved.
www.ideasfirst.in
August, 2010

Therefore clean properties typically demand a premium up to 50-100% of the property value. This
again differentiates the sector from the realty markets world over.
5.5. High utilization of land in India
Owing to high population density, availability of natural water resources and presence of habitable
& fertile land almost everywhere in country, there is negligible percentage of the total land which
has not been put to some use or for revenue generation. This is in stark contrast to the western
countries with low population density. Companies find it difficult to acquire large track of land to set
up their factories along with vendors production facilities and residential complexes.
www.ideasfirst.in
August, 2010

6. The emerging trend
6.1. Growing interests amongst NRIs

There is a renewed interest amongst Non-Resident Indians specially amongst the older generation
who are purchasing properties and houses in Indian Tier I & Tier II cities for investment, as second
homes and also increasingly with a view to spend their retirement years in India. Encouraged by
this trend a number of developers are tapping their pockets and have conducted road-shows for the
premium projects specifically targeted towards this affluent group.
6.2. Demand for premium housing

Over the last few months, especially in the Tier I & Tier II cities, demand for premium housing and
larger properties have been growing. There have been a slew of launches of premium and luxury
residential projects. Further demand for larger residential properties is also increasing.
6.3. Macroeconomic policies

The macro economic polices will play a very important role in shaping the future of the industry.
With 100% FDI being allowed in single brand retail stores and under cash-n-carry formats, a lot of
demand for retail space in the Tier I & Tier II cities has been generated. As and when the FDI
norms are relaxed the sector is expected to benefit from a demand spike.
6.4. Improving connectivity & mass transport

The improving connectivity and public transport is helping the cities to spread and also rationalizing
the realty prices by reducing concentration. It would an increasingly important role in the growth of
the sector.
6.5. Strong emergence of new categories for demand of land

Shopping malls, warehouses, airports, resorts, multiplex theaters, entertainment centers like fun
parks, sports facilities, educational institutes, parking facilities & venues for public gathering for
purpose of conferences, workshops, celebrations et al are all contributing to a positive upswing to
this new phase of land sale in India.
www.ideasfirst.in
August, 2010
10

7. Appendix
7.1. Industry classification
The Real Estate sector can be classified in several ways, one being based on the origin of demand as:
Residential, Commercial and Hospitality. These can further be sub classified to get a deeper
understanding.
7.1.1. Residential
Residential segment contributes most to the total real estate demand at approximately 687 mn sq.
ft. or 63%. The strong desire of Indians to own a home, now supported by the rising income
explains this increasing demand. However this demand is very concentrated with about 80% of it
coming from the top seven cities in India. This is not surprisingly given their huge migrant working
population and the booming corporate sector. NCR surpasses all other cities with 114 million sq.ft.
of demand projected through 2008-2012, followed by Bangalore and Chennai that account for 16%
each of the total demand projected in this segment.
7.1.1.1. Low Cost Housing

A subdivision of the residential segment, Low Cost Housing or Low Income Housing forms a
large chunk of the total housing requirement. With more than 55% of the total urban
population either living in one room accommodations or slums, the segments offers a lot of
potential for growth. The increasing incentives and subsidies from the government for the
development of low cost housing are attracting a lot of interests of the developers recently.
7.1.2. Commercial Space

Commercial space typically demands a premium over residential and other properties. However the
commercial sector was hit the worst during the economic meltdown in second half of 2008.
Commercial rentals in top metros plummeted by more than 30-40%.
Lately, following the residential segment, the commercial sector has started showings signs of
recovery. With the economy back on the higher growth trajectory and the ambitious hiring plans of
companies especially in the IT /ITES sector, the demand for commercial space is poised to go up.
According to industry estimates new demand for approximately 243 mn.sq.ft. of commercial space
across India would be generated between the years 2008-2012. While Bangalore leads with
highest demand for commercial space, NCR is closing up owed to the emergence of business
districts like Gurgaon and Noida over the past few years.
7.1.2.1. Retail
Increasing incomes, changing spending habits and favorable consumer demographics, all
have attracted many big players to this segment, like Reliance and Bharti amongst others,
along with their well-established foreign partners like Walmart, Carrefour etc. Retail sector in
India had been primarily un-organized unlike most other important sectors and the big
players want to change the rules of game by providing better shopping experience and
bringing cheaper prices. Government is mulling to liberalize the retail sector by allowing
www.ideasfirst.in
August, 2010
11

foreign companies to set up their retail stores in India, which if liberalized, would further give
a boost to demand for retail space. The segment has already seen multifold demand growth
over the last couple of years. Though Tier I cities still form the bulk of retail space demand,
Tier II and Tier III cities are fast catching up and have caught the interests of leading retailers
and developers alike. Of the total estimated retail demand of 95 mn.sq.ft. in India between
2008-12, NCR ranks first with demand of approx. 19 mn.sq.ft. followed by Mumbai with 15
mn.sq.ft.
7.1.2.2. Hospitality
With 73 mn.sq.ft. of hospitality demand by 2012, the segment though small is growing fast.
Again Bangalore and NCR lead the segment with an expected 31 mn.sq.ft or 43% share of
pan-India demand projection followed by Mumbai with 12 mn.sq.ft.
Metros with their booming corporate sector are experiencing a fast growing demand for star
hotels and service apartments. Increasing discretionary spending, changing trend in family
vacations, and increasing domestic & international travelers are the main forces behind the
growing demand.
www.ideasfirst.in
August, 2010
12
Qualitative Coverage - Buy

Rating -
Ackruti City Ltd

CMP: C533.35
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Overview
Risk
Stock Data
Market Cap
: C 38,795.9 mn
52 week range
: C 590 / C 453
Bloomberg
: AKCL IN
Reuters
: ACKR.BO
BSE
: 532799
NSE
: ACKRUTI
Avg Daily Vol. (1 year NSE)
: 120,442
No. of Shares
: 72.74 mn
ACL has a presence in the high margin slum rehabilitation

projects, has an understanding of the Western India market
with good revenue visibility. We recommend a Buy on the
stock.
Investment Rationale
Presence in high margin slum rehabilitation projects:

ACL is one of the major players in the lucrative slum
rehabilitation projects in Mumbai and was awarded the 1st
slum rehabilitation project by Maharashtra government in
1995. The company has completed approximately 4.7 mn sqf
of rehabilitation area and has 5.4 mn sqf under construction.
These projects are highly profitable as it does not involve
initial investment in land unlike conventional real estate
projects. The company develops housing for the slum
dwellers free of cost and in return the company gets higher
FSI/TDR on land owned by it. However, SRA projects have a
long-gestation period.
Shareholding Pattern (as on June 30,2010)
Others
10.7%
FII
5.0%
Promoter
82.5%
Relative Performance
Financial Performance
(C Crs)
FY10
FY09
FY08
FY07
Sales
579.63
397.08
439.76
189.48
EBITDA
424.44
456.3
419.84
114.13
Adj PAT
164.91
267.34
297.79
77.72
23.54
39.43
44.44
11.32
Analyst: Vishal Chopda
Focus on western India: ACL has a strong focus on

western India with 54% of project area (excluding townships
& biotech parks) in Mumbai. The Mumbai market is one of
the most stable markets in the country and was the first to
recover post the economic slowdown. Recently the company
has started to expand into Pune and Gujarat to reduce its
dependability on one market.
Strong understanding of the market & adaptability: ACL
has focused on where it is strong which is the Mumbai
market and never went it the race to have a Pan-India
presence. Further, the company has shown great
adaptability in accordance with the change in market
dynamics. The company converted three Mumbai projects
from retail to commercial and one project in Mumbai from IT
park to residential sensing the softening demand for the
original projects.
Source: Capitaline
EPS
Date: August 13, 2010
Ackruti City Ltd (ACL) is a real estate developer with

operations mainly in Mumbai. The company develops
residential properties, commercial properties and SEZs. The
company has also started to venture into Pune, Surat,
Baroda and Ahmedabad. However, Mumbai still constitutes
the majority of its ongoing projects. The company is also
developing many projects through public-private partnership
(PPP) and joint ventures (JV).
Return
DII
1.8%
Sensex: 8167.03
vishal.chopda@ideasfirst.in
Leveraging through partnerships: ACL has formed JVs

with DLF, Hiranandani, Marathon and Everest to develop
various properties. The JVs help the company to bring the
required money for the project and also share the risk
associated with the project. The company is also into PPP
projects like development of government staff quarters and
offices in Mumbai and developing bus terminals in Gujarat.
Out of the current project area of 27.5 mn sqf (excluding
townships & biotech parks), 20.9% of projects are PPP.
Ackruti City Ltd

Key Concerns
Concentration in Mumbai region: Currently, ACL is

heavily dependent on the Mumbai region for its revenues.
Fall in prices in the region due to oversupply, increase in
construction costs or any adverse government policy
decision could impact the valuation of the company.
However, the company has already started developing
properties in other cities of the country to mitigate this
risk.
Project execution risks: Any delay in execution of
projects will significantly impact the valuation of the
company.
Economic slowdown: A slowdown in the economy due
to any internal or external reasons could impact the
demand and pricing of real estate.
Upcoming projects: ACL has total area under management

of 53.7 mn sqf with the companys share being 27.5 mn sqf.
Including the various townships and biotech parks the
company is developing the companys share of area under
management is 97.3 mn sqf.
Recommendation
With a presence in the high margin slum rehabilitation

projects and a strong understanding of the market in which it
operate, ACL is a good investment for long term. The
company scores a 3 (out of 5) on our star matrix and has
been assigned low risk-medium return rating.
We recommend a Buy on the stock.
ACLs footprint in Mumbai City
Qualitative Coverage - Strong Buy

Rating -
Anant Raj Industries Ltd

&03C137.7
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Overview
Risk
Stock Data
Market Cap
: C40,635.3 mn
52 week range
: C 164 / C 99
Bloomberg
: ARCP IN
Reuters
: ANRA.BO
BSE
: 515055
NSE
: ANANTRAJ
: 518,950
No. of Shares
: 295.1 mn
AIL has negative net debt and will be launching projects of

5.76 mn sqf in next two years including 0.52 mn sqf of superpremium residential projects in Delhi. We recommend a
Strong Buy on the stock.
Huge land bank acquired at low cost: AIL has a land bank
of 1000 acres (developable area of 70 million sqf) in the NCR
region. Around 95% of this land is located within 30 kms of
Delhi. The land has been acquired at low cost keeping in
mind the future development in those areas. The low land
cost and the lease-based model enables the company to
enjoy high margins as compared to the other real estate
players.
Others
9.5%
FII
28.5%
Promoter
61.4%
Source: Capitaline
(C Crs)
FY10
FY09
FY08
FY07
286.31
252.40
603.76
208.04
53.78
67.91
29.71
4.34
EBITDA
311.81
288.46
591.66
181.34
Adj PAT
238.51
207.26
436.25
125.47
7.97
6.90
14.55
5.06
Other income
EPS
Strong balance sheet: As on March 31, 2010 AIL had loans

of around INR 1390 mn compared to cash & bank balance of
around INR 4891 mn. Low debt and high cash levels means
the company has a comfortable liquidity position and is not
forced to sell its assets at distressed valuations in case of a
slowdown in the market.
Steady rental income: AIL had a rental income of INR
489.50 mn which is expected to double in FY11. The
company is expected to complete 3.60 mn sqf of lease
generating commercial/IT projects in next 24 months. The
lease based model assures steady cash flow even in the
event of a downturn in property prices and helps the
company to fund other projects.
Sales
Anant Raj Industries Ltd (AIL) is a real estate company predominantly based in the Delhi-NCR region. The company
develops residential buildings, commercial properties, SEZs,
hotels & IT parks. The company follows a lease-based model
for commercial properties and a sale-based model for
residential properties. Earlier, the company only
manufactured ceramic tiles which currently constitute less
than 5% of its total revenue.
Return
DII
0.7%
Sensex: 18167.03
Upcoming projects with foray in premium residential

market: AIL is expected to complete 5.76 mn sqf of projects
in the next two-three years. Out of these, 0.52 mn sqf of
residential projects at Hauz Khas, Delhi and Bhagwandas
Road, Delhi are of premium segment having realizations in
the range of INR 35,000 to INR 50,000 per sqf.
Strategic Alliances: AIL entered into a 50.1:49.9 JV
agreement with Monsoon Capital for development of an IT
Park at Panchkula, Haryana resulting in cash infusion of
Rs.1,846 mn. Also, the company has a 50:50 JV with Swan
Consultants, Reliance ADAG Company, with total investment
of Rs.4,000 mn for two hospitality projects at NH-8 near
Airport and an IT park at Manesar, Haryana. AIL also sold
26% stake in its subsidiary, Anant Raj Projects, to TAIB Bank
Bahrain for INR 2,160 mn. AILs share in the above
investments alone comes out around INR 12,000 mn.
Anant Raj Industries Ltd.

Projects completed during the year
Constructed
Area (mn sqf)
Project
Location
IT Park
Manesar
1.80
Shopping Mall
Kirti Nagar, Delhi
0.75
Hotel Grand
Near Airport, NH-8
0.06
Hotel Papillion
Near Airport, NH-8
0.04
Commercial
Complex
Greater Noida
0.12
Total
Key Concerns
2.77
Projects in pipeline to be completed over 2-3 years
Constructed
Area (mn sqf)
Project
Location
IT-SEZ
Rai, Sonepat, Haryana
2.10
IT Park
Panchkula, Haryana
0.54
Housing
project
Kapashera, Near
Airport
0.29
Housing
project
Rai, Sonepat
1.00
Housing
project
Hauz Khas, Delhi
0.26
Housing
project
Manesar, Gurgaon
1.14
Housing
project
Bhagwandas Road,
Delhi
0.26
Hotel Tricolor
Near Airport, NH-8
0.10
Hotel Shimla
Shimla
0.07
Total
Strong understanding of the market: AIL has been regular

in monetizing its assets and never became a part of the race
to have PAN India presence by acquiring land at high cost.
The company sold land during the boom period of FY07-08
and bought land at low prices during FY09-10.
Concentration in one geographical segment: All the
projects of AIL are located in the NCR region exposing the
company to significant concentration risk. Fall in prices in the
region due to over supply, increase in construction costs or
any adverse government policy decision could impact the
valuation of the company.
Project execution risks: AIL is expected to complete the
5.76 mn sqf of projects in the next two years. Any delay in
execution of these projects will significantly impact the
Economic slowdown: A slowdown in the economy due to
any internal or external reasons could impact the demand
and pricing of real estate.
Recommendation
With negative net debt and huge low cost land bank in the
NCR region, AIL is an attractive opportunity for the long term.
The company scores a 4 (out of 5) on our star matrix and
has been assigned the low risk-high return rating.
We recommend a Strong Buy on the stock.
5.76
Land Acquisition Strategy
Ansal Properties &

Infrastructure Ltd

Rating -
CMP: C91.7
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Ansal Properties & Infrastructure Ltd (APIL) is a Delhi based

real estate developed with presence in the NCR
region, UP, Rajasthan, Punjab and Haryana. The company
has experience of more than 40 years and has been
diversifying into different segments of infrastructure and
realty sector. The company has developed and delivered
more than 193 mn sqf under various product categories and
geographical locations.
Return
Stock Data
Market Cap
: C12,075.1 mn
52 week range
: C 97 / C 58
Bloomberg
: APIL IN
Reuters
: ANSP.BO
BSE
: 500013
NSE
: ANSALAPI
: 1,087,584
No. of Shares
: 123.1 mn
APIL has a strong track record, strong project pipeline and is

trading at a significant discount to its book value. We
recommend a Buy on the stock.
Inexpensive valuations: At CMP of C 91.7, APIL is trading

at P/BV of 0.94x which is very low as compared to other real
estate players. Inexpensive valuations provide a margin of
safety leading to low risk.

Others
30.4%
Promoter
55.4%
DII
2.8%
FII
11.5%
Strong track record: APIL has track record of more than 40

years and has delivered more than 193 mn sqf under various
product categories and geographical locations. The company
has delivered around 17.59 mn sqf of commercial &
residential properties, 98.37 mn sqf of integrated townships
and 72.57 mn sqf of farm development across various
locations. The company was the first to build one of the initial
multiplex, PVR Saket in the Delhi region. The company has
developed lot of quality properties in the central business
district of Delhi and Gurgaon.
Geographical spread of operations: APIL is spread across
NCR region, UP, Rajasthan, Punjab and Haryana. Thus, the
company is not dependant on one geographical area of its
revenues and hence, does not face any concentration risk
unlike many other small and medium-size real estate
players.
Ongoing projects: APIL has more than 33 projects and

more than 19 live townships with a total saleable area of
around 270 mn sqf over the next few years. This includes
commercial area of around 51 mn sqf and residential area of
around 160 mn sqf. The company is developing 3 townships
at Gurgaon, Lucknow and Dadri, an industrial park at
Gurgaon and an Agro SEZ at Sonepat.
Source: Capitaline
(C Crs)
FY10
FY09
FY08
FY07
Sales
800.33
651.08
932.99
798.00
EBITDA
220.60
156.17
277.07
228.60
Adj PAT
55.32
34.58
172.94
136.55
6.06
2.78
15.08
23.00
EPS
Ansal Properties & Infrastructure Ltd

Key Concerns
Recommendation
Project execution risks: APIL is developing more than

270 mn sqf over the next few years. Any delay in
execution of these projects will significantly impact the
With inexpensive valuations, strong track record and strong

project pipeline , APIL is an attractive opportunity for the long
term. The company scores a 3 (out of 5) on our star matrix
and has been assigned the low risk-medium return rating.

Ongoing projects
Breakup of Gross Saleable Area of 270 mn sqf

D
Z W
Z
s
',&^/
',
Residential Area (160 mn sqf)
Commercial Area (51 mn sqf)
Z
,
hW
hW

Rating -
Brigade Enterprises Ltd

CMP: C134.25
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Overview
Risk
BEL has a comfortable leverage position, strong project

pipeline and has recently forayed into the affordable housing
segment. We recommend a Buy on the stock.
Stock Data
Market Cap
: C 15,069.6 mn
52 week range
: C 187 / C 82
Bloomberg
: BRGD IN
Reuters
: BRIG.BO
BSE
: 532929
NSE
: BRIGADE
: 290,735
No. of Shares
: 112.3 mn
Foray into affordable housing: BEL has entered the

affordable housing segment though Brigade Value Homes.
The company will develop the same at Kanakapura Road,
Devanahalli Town, Mysore Road and K R Puram in
Whitefield. The company plans to develop around 10,000
homes in this segment and will be in the price rand of Rs.1.02.6 mn/unit.
Comfortable leverage position: BEL has a comfortable
leverage position with its gross debt to equity ratio at 0.75x
as at end of FY10 on a consolidated level.
Others
34.9%
Promoter
57.5%
Expanding outside Bangalore: BEL has been traditionally

focused on the Bangalore and is now expanding to other
southern cities like Mysore, Hyderabad, KochiS and
Chennai.
Upcoming projects: BEL has 3 mn sqf of
office/retail/hospitality space under construction which is
expected to generate revenue during H2FY11. Currently, the
company has 6 mn sqf of ongoing residential projects which
is about 80% sold. The company plans to launch another 710 mn sqf this year which will be sold over next 3 years.
FII
4.7%
Source: Capitaline
(C Crs)
FY10
FY09
FY08
FY07
Sales
324.69
349.79
460.71
378.17
EBITDA
143.07
146.45
185.55
133.8
Adj PAT
47.4
86.78
101.87
73.34
EPS
4.02
7.53
8.75
26.96
Brigade Enterprises Ltd (BEL) is a Bangalore based realty

player. The company which has been traditionally focused on
the Bangalore is now expanding to other southern cities like
Mysore, Hyderabad, Kochi and Chennai. Since inception, the
company has completed more than 100 building and 20 mn
sqf of saleable area.
Return
DII
2.8%
Sensex: 18167.03
BEL is in the process of completing two large enclave

projects of 40 acres each - Brigade Metropolis at Whitefield
and Brigade Gateway at Malleshwaram, Rajajinagar. BEL
will be launching villa projects in Bangalore & Mysore and a
120 acre mixed used enclave at Devanahalli, Bangalore.
Further, the company is coming up with SEZ developments
in Mangalore and Kochi, and has land banks in strategic
locations in Bangalore for built-to-suit commercial
developments. BEL (under Brigade Hospitality Services Ltd)
will soon be launching the second MLR Convention Centre in
Whitefield, Bangalore Sheraton - Mysore, Holiday Inn Chennai and Holiday Inn - near International Airport,
Bangalore.
Brigade Enterprises Ltd

Residential Projects
Key Concerns
Project
Units
Saleable Area (mn sqf)
Metropolis
1618
2.52
Gateway
1255
2.21
Courtyard
184
0.28
Palm springs
154
0.28
Sparkle
192
0.19
Petunia
49
0.18
Horizon
70
0.11
Solitaire
43
0.07
Crescent
10
0.03
Citadel
0.02
Odyssey
0.01
14
0.01
Homestead - 4
Total
5.91
Commercial Projects
Project
Project execution risks: Any delay in execution projects will

significantly impact the valuation of the company.
Recommendation
With comfortable leverage position, strong project pipeline

and the recent foray into the affordable housing segment,
BEL is an attractive opportunity for the long term. The
been assigned the low risk-medium return rating.
Area (mn sqf)
North Star, Gateway
1.01
Summit, Metropolis
0.81
Orion Mall, Gateway
0.75
Gateway - Hotel
0.38
Arcade, Metropolis
0.08
MLCP - Gateway
NA
MLCP - Metropolis
NA
Total
Concentration in one geographical segment: Currently,

BEL is heavily dependent on the Bangalore region for its
revenues. Fall in prices in the region due to the slowdown in
IT sector, oversupply, increase in construction costs or any
adverse government policy decision could impact the
valuation of the company. However, the company has
already started developing properties in other southern cities
to mitigate this risk.
3.03
Qualitative Coverage Buy

Rating -
DB Realty Ltd
CMP: C
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
DB Realty (DBRL), promoted by Vinod K Goenka and

Shahid U Balwa, is engaged in real estate development in
and around Mumbai and Pune. The company, incorporated
on January 8, 2007, is currently focused on both residential
as well as commercial (including retail) realty projects. In
addition, the company is also involved in mass housing
projects as well as cluster redevelopment projects in
Mumbai.
Return
Stock Data
Market Cap
: C109,151 mn
52 week range
: C / C355
Bloomberg
: DBRL.IN
Reuters
: DBRL.BO
BSE
: 533160
NSE
: DBREALTY
Avg Daily Vol. (quarterly NSE)
: 105,667
No. of Shares
: 243,258,782
DBRL has completed development over 14.4 million square

foot(msf) in the past. Ongoing projects are developing 19.5
msf. The forthcoming and upcoming projects will develop
41.5 msf.
Shareholding Pattern
Others
25.3%
DII
2.7%
FII
8.0%
Almost 85% of the land development done by DBRL is done

in Mumbai. Also, almost 36% of the ongoing projects are in
the residential space and only 8% of the total development is
in commercial space. In the forthcoming and upcoming
projects, the development would skew more towards
residential space.
Promoter
64.0%
From the development of mass housing projects for the

Mumbai local authority, DBRL generates transferable
development rights (TDRs), which are rights to develop
additional built-up area in parts of Mumbai, generally north of
the relevant development, and can be utilized in its own
projects or other developers projects in Mumbai. Currently,
the companys ongoing project is expected to generate TDRs
of up to 10.94 million sq ft. Similarly, the forthcoming and
upcoming projects of the company are expected to generate
TDRs of up to 6.21 and 0.73 msf, respectively. So the
aggregate TDRs generated from ongoing, forthcoming and
upcoming projects amount to approximately 17.88 msf.
Likewise, the cluster redevelopment of old and dilapidated
structures in Mumbai grants the company additional floor
space index. Depending on market/commercial conditions,
the company either sells TDRs or uses it for own
development projects. Revenue from sale of TDRs
constituted 76% of total revenue in FY 2009.
DBRL has unique business model wherein it focuses on land
acquisition, securing regulatory approvals, project execution
and sales. It outsources the design and construction part of
the real estate value chain.
Source: Capitaline
CFUV
FY09
Sales
464.43
EBITDA
232.58
Adj PAT
141.67
EPS
170.48
Analyst: Ratin Asthana
ratin.asthana@ideasfirst.in
DBRealty Ltd.
Projects Status Update
Key Concerns
Sold Value C
mn
Project
Area Sold(Sq.
ft)
Orchid Zone
164347
813
Orchid Woods
86845
936
Orchid heights
141321
2826
Orchid suburbia
35268
334
Orchid crown
75436
1802
Orchid Turf View
5000
200
Focused on Mumbai and Mumbai Suburbs: DBRL is

focused on the Mumbai market which has shown the
quickest revival after the 2008 slump and which
expected to show the highest demand for residential
housing in the coming 3 years. This ensures better sales
and lesser inventory.
Redevelopment schemes offer opportunity to develop
projects on such land at a lower cost in prime locations.
The combination of better sales and low cost provides
for better margins.
Ongoing projects of the company are expected to
generate TDRs of up to 10.94 msf, providing enough
liquidity as the prices of TDR in the Mumbai market are
quoting at around C2500/ sq ft and are looking firm.
DBRL has recently announced that it will spend C1000
crore on acquisition of new projects. It plans to add
44msf of new inventory to its portfolio. It also expects to
generate 9 msf of TDR in next three years and 0.5 msf
through its hillview project.
Recommendation
DBRL seems to have good future prospects because it

plans to increase its land bank through redevelopment
projects which is a cheaper way to acquire land.
Moreover, since DB realty is mostly focused on Mumbai,
there are generally better margins available to the
company.
The stock is a good buy in the medium to long term. It
has been awarded a low risk medium return rating and
a 3 star on our 5-star rating system.
DBRL has very little experience compared to its peers which

operate along the whole real estate supply chain. There are
many cases pending against DBRL and its subsidiaries.
Most of the cases are related to land disputes.
Since real estate business is very sensitive to local
regulatory scenario, DBRL is highly susceptible to any
adverse regulatory change pertaining to real estate in
Maharashtra. Till date they have limited experience in
conducting business outside Mumbai and especially outside
Maharashtra. For redevelopment projects, there is high
degree of uncertainty related to title of lands and many
upcoming and forthcoming projects still require regulatory
approvals.
Both the commercial projects among the ongoing projects
are to be funded through the IPO proceeds. These
commercial projects are likely to be completed by end of CY
2012. Since the commercial projects involve upfront cash
outgo towards land and construction, revenues are expected
only when the project is leased or sold out, which will happen
only at advanced stage of completion. With two long years
for completion, there will not be any cash inflow from
commercial realty segment.
DB group has 112 subsidiaries and 3 partnership firms, with
many related party transactions. The company, as of 30
September 2009, had given corporate guarantees for certain
debt facilities availed by its related entities, aggregating to
nearly C2518.89 crore. This is in excess of the net-worth of
the company at C1411.55 crore end September 2009. Out of
the total corporate guarantees provided, C1769.26 crore (or
70% of guarantees) had been provided to entities engaged in
businesses other than real estate such as hospitality and
telecom. DBRL has also made an investment of C705.15
crore in unlisted entities related to it. In addition, the
promoters have provided personal guarantees aggregating
to approximately C4328.77 crore in connection with certain
debt facilities availed by such entities. DBRL has extended
interest-free loans to various entities related to the
promoters, amounting to more than C553.56 crore end
September 2009. Further, it has not signed written
agreements to document the terms and conditions of such
loans. Moreover, some of these entities are either incurring
losses or have negative net-worth.

Rating -
DLF Ltd
CMP: C 322.45
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Overview
Risk
Historically the companys activities were mostly restricted to

North India primarily in the NCR. However to reduce
concentration in North India and de-risk its business model
the company acquired land across the country initially
through partial JVs/JDAs.
Market Data
Market Cap
: C 547,343.0 mn
52 week range
: C 491 / C 252
Bloomberg
: DLFU IN
Reuters
: DLF.BO
BSE
: 532868
NSE
: DLF
: 22,81,660
No. of Shares
: 1,697.4 mn
DLF has a pan India presence across 31 cities and has ~238
million square feet (msf) of completed development and 423
msf of planned projects. Currently the company has a land
bank of 413 msf and is executing 55 msf projects in various
regions across the country.
Post economic slowdown, the financial year 2009-10 has
been a year of consolidation for the company. During this
period the company restructured its business model along
two lines 3 Development Companies (Dev Co) and Rental
Company (Rent Co). It also integrated CARAF/DAL with the
Rental business of the company to create a solid base of
stable cash flows in the form of rentals. As a strategic
initiative the company is also strongly considering
divestments of its non-core business to primarily focus on
core business operations.
Others
5.8%
FII
15.1%
Promoter
78.6%
Land Bank: Currently, DLF has a land bank of 413 msf

primarily located in the NCR, New Delhi, Mumbai, Kolkata,
Chennai and Bengaluru. The available land bank is branched
out within three business operations Dev Co (313 msf), Rent
Co (89 msf) and Hotel (11 msf). Since these premium land
banks have been accumulated at a very low price the
company can take some realistic measures while pricing
some of its projects to counter slowdown in any particular
segment, without disturbing its profits.
Source: Capitaline
Financial Performance (C
C Cr)
FY10
FY09
FY08
FY07
FY06
Sales
7,423
10,035
14,433
2,637
1,794
EBITDA
3,846
5,993
9,953
2,904
875
Adj PAT
1,720
4,409
7,800
937
404
EPS (C)
10.13
26.16
45.14
12.26
108.77
Analyst: Swapnil Suvarna
DLF Limited a real estate brand name in India has over 60

years of experience in the real estate development business.
The company was mainly engaged in the business of
developing residential, commercial and retail properties but
has also forayed into infrastructure, SEZ and hotel
businesses.
Return
DII
0.5%
Sensex: 18167.03
swapnil.suvarna@ideasfirst.in
Divestment Plans: In the financial year 2009-10 the

company had targeted C5,500 crore through divesting its non
core assets/businesses. At the end of the year 2009-10 the
company managed to unlock only C1,800 crore following
approval delays or in expectation of better valuation. These
advances were primarily used to repay debt. In between the
Wind Power business with an established market value of
C1,000 crore was retained. Over the next 15-18 months DLF
is targeting potential divestment proceeds in excess of C2,500
crore which includes Dwarka worth C800 crore, TIDCO worth
C900 crore and Others worth C1000 crore (of which a deal
worth C294 crore was achieve in June 2010 quarter). These
proceeds will be mainly used for debt repayment.
DLF Ltd
Upcoming Projects: Out of the 55 msf area under

construction, 21 msf is in Gurgaon, 5 msf is in Super Metros,
12 msf is in Rest of India and 16 msf is for Rent Co. The
company has commenced construction of ~5.4 msf uder
home segments which includes 2 msf Capital Greens in
Delhi, 0.5 msf SIEL and 2.8 msf BTM Extn. Bengaluru. The
company expects to deliver ~30 msf through 2012-13. The
Mumbai NTC mills project launch is expected this financial
year after receiving all necessary approvals.
Pick up in Company Performance: In the financial year
2009-10 the company achieved sales of 12.5 msf against a
target sale of 14-15 msf. The company has now set a target
(15-18 msf) of new bookings for the financial year 2010-11.
The demand in residential segment remained buoyant as the
company saw bookings of 3.6 msf and 1.44 msf in the March
2010 and June 2010 quarter respectively. The company
indicates to focus on sale of Pan India mid income housing
projects and also on sale of homes of City Center locations in
Chennai/Kochi at an attractive price. Demand for
Commercial Complexes continued to remain subdued
however the company still witnessed as sale of 0.46 msf in
June 2010 quarter. Under the annuity business the company
has targeted leasing of 3-4 msf in the current financial year
on back of no significant change in government policy
actions or macro environments. Currently the companys
lease portfolio comprises of 20 msf which provides an
annualized rental of more than C1,400 crore. As on June
2010 quarter the rental income generated is ~ C300 crore.
Although the retail segment has seen substantial increase in
enquiries, the actual leasing has picked up momentum. In
the June 2010 quarter the company saw 1.12 msf leasing
done, more than the net leasing of 0.93 msf in the financial
year 2009-10.
Debt situation: During the financial year 2009-10 the

company repaid ~ C5,600 crore against the mandatory
debt repayment of C3,549 crore. At the end of June 2010
quarter the company has already repaid C732 crore
against the mandatory debt repayment of C2,890 crore in
the financial year 2010-11. Currently the companys net
debt stands at C18,463 crore with a 0.68 debt/equity ratio.
The company has indicated that for financial year 2010-11
the targeted ratio is expected to be between 0.4x-0.5x.
Key Concerns
Execution Risk: Any delay in the execution of these

projects or divestment plans either through rise in
operational cost or unexpected delays would significantly
impact the cash flow hampering the debt de-leveraging
plan and the projections of the company.
Recommendation
DLFs huge low cost land bank and future potential in the
development and annuity business makes them an
attractive opportunity for long term. The company scores
4 (out of 5) on our star matrix and has been assigned low
risk - medium return rating.
We recommend a Buy on the stock..
Sales in FY2009-10
Region /
Heads
City
Area Launched
( msf )
Area Sold
( msf )
Sales Value
( Rs. Crs )
Avg. Realisation
(psf )
Super Metro
Delhi
4.56
4.21
3300
7838
Gurgaon
DLF City & New Gurgaon
3.50
3.12
2550
8173
Rest on India
Panchkula, Banglore & Goa
5.17
3.90
950
2439
Existing Stock
New Gurgaon, Kochi & Indore
1.32
350
2652
13.23
12.55
7150
5699
Total
Expected Sales in FY2010-11

Total Sales Bookings
15 18 msf
Location(s)
Luxury
1 1.5 msf
Mumbai, Delhi
City Center / High End
2 3 msf
Chennai, Cochin, Gurgaon
Mid- Income / Value Housing
12 14 msf
Gurgaon, Hyderabad, Kochi, Chandigarh, etc
Ganesh Housing
Corporation Ltd

Rating -
CMP: C 201.75
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Overview
Risk
Market Data
Every quarter GHCL is known to roll out one project and at

present has four projects in line i.e. Satva, Suyojan, Maple
County and Maple County-2. At the end of March 2010
quarter, the company in these projects had 1.656 msf (worth
C356.42 crore) of total saleable area under construction, out
of which, 1.224 msf (worth C245.07 crore), has already been
booked by the customers.
Market Cap
: C 6587.1 mn
52 week range
: C 205 / C 97
Bloomberg
: GHFC IN
Reuters
: GHFC.BO
BSE
: 526367
NSE
: GANESHHOUC
: 54,668
No. of Shares
: 32.66 mn
DII
6%
As a strategic move GHCL other then residence project is

also focusing on commercial offices, retail malls, SEZ (IT &
ITES), hotels and townships. IT-SEZ Million Minds and Golf
Township Smile City are its two major projects in pipeline.
Yash Organiser Private Limited subsidiary company of
GHCL has its core focus on construction. It is constructing
GLOMAX the commercial shopping mall in Ahmedabad.
Others
19%
City: As of today it is clearly visible that Ahmedabad is well

placed for multi-pronged growth since it is growing
industrially, commercially, financially, infrastructurally and
culturally. The city is centrally connected to all ports in
Gujarat and is expected to be the main passage for trade,
which is expected to facilitate the growth of new high-end
manufacturing industries. Recently a business survey has
placed the city as one of the top five destinations for
investment in the country. The New International Airport is
expected to bring a lot of positivity into citys investment
climate. In the next five years the city is expected to
generate large-scale employment through investments
worth US$15 billion, hence ensuring steady growth in real
estate.
Promoter
56%
Source: Capitaline
Financial Performance (C
C Cr)
FY09
FY08
FY07
FY06
FY05
Sales
55.05
127.43
45.45
30.70
14.90
EBITDA
76.77
118.48
41.98
14.76
10.33
Adj PAT
16.79
106.06
16.57
14.47
10.54
EPS (C)
14.85
31.71
9.76
11.76
26.05
Analyst: Swapnil Suvarna
Gujarat based Ganesh Housing Corporation Limited (GHCL)

is engaged in the business of construction and real estate
development mainly in Ahmedabad. GHCL till date has
constructed around 16 million square feet (msf) of residential
space in Ahmedabad since their core focus has always been
in the residence space. Currently the company has 1.2 msf
of residential projects in channel. In the next eight-nine years
the company plans to execute 56 msf of space.
Return
FII
19%
Sensex: 18167.03
swapnil.suvarna@ideasfirst.in
Land Bank: The Company in its books has 662 acres of

highly developed land. The accumulated land bank spread
across the city of Ahmedabad at critical locations like SG
Road, Thaltej, Ognaj, Godhavi, Adalaj and Sola. Recently
the company added six acres of land located on SG Road.
The company is planning commercial development with a
saleable area of 6,75,000 square feet.
Strong Financials: In the financial year 2009-10 the
company posted net income of C100.57 crore and net profits
of C50.6 crore as compared to an income and profit of C89.5
crore and C49.4 crore respectively in the financial year 200809.
Ganesh Housing Corporation Ltd

Key Concerns
Strategic Alliances: An US based investment firm

Monsoon Capital has made an investment of `1,350
million in GHCLs integrated township project named
Smile City.
Single Location Focus: The Companys entire land bank

and projects are concentrated in Ahmedabad itself. Any
negative event within the city could impact the company and
its future plan significantly.
Upcoming Mega Projects: The Companys biggest

project till date is an integrated township project named
Smile City at Godhavi, which is only 4.5 km away from
the Ahmedabad city limits. The entire township is spread
over an area of 534 acres. This project has received an
FDI investment of `1,350 million through Monsoon
Capital and is expected to generate above `32,000
million over the period of seven-eight years. Million
Minds an IT-ITES SEZ at SG Road in Ahmedabad is
spread over an area of 108 acres. In this project of
multiple use, 80 acres is notified for development of ITITES SEZ and the remaining 28 acres is would be
divided for other developments like residential,
commercial, retail, hospitality etc. The company may
denotify the above project and change the use of entire
108 acres as SG Road has a good potential for
residential, commercial and other developments. Godrej
Properties, which is batting heavily on Ahmedabad is
already developing township behind GHCLs land, is a
positive to this project.

Execution Risk: Though the management has increased its
pace of development, any delay in the execution of these
projects either through rise in operational cost or unexpected
delays would significantly impact the cash flow and the
projections of the company.
Recommendation
We see GHCL as an attractive opportunity for the long

term. Thanks to its huge low cost land bank and future
potential of Ahmedabad city. The company scores a 4
(out of 5) on our star matrix and has been assigned the
best risk-reward rating.
Projects Summary
Housing Development
& Infrastructure Ltd

Rating -
CMP: C285.05
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Housing Development and Infrastructure Ltd. (HDIL),

promoted by the Wadhawan group, is one of the leading real
estate players in Mumbai. The company has land reserves
(including TDR) of 221 mn sqf and currently has 63 mn sqf of
projects under construction. The company is a market leader
in slum rehabilitation projects and is currently executing the
largest SRA project under the expansion & modernization of
Chhatrapati Shivaji International Airport (CSIA), Mumbai.
Return
Stock Data
Market Cap
: C101,523.0 mn
52 week range
: C 411 / C 202
Bloomberg
: HDIL IN
Reuters
: HDIL.BO
BSE
: 532873
NSE
: HDIL
: 7,942,915
No. of Shares
: 366.8 mn
HDIL has a strong expertise & is a market leader in SRA

projects and the company has a presence in the resilient
Mumbai market with a strong revenue visibility. We
recommend a Strong Buy on the stock.
Strong expertise & market leader in SRA projects: HDIL

is a market leader in SRA projects which have strong entry
barriers. These projects require dealing with government
authorities and slum dwellers which need considerable
experience. SRA projects are highly profitable as it does not
involve initial investment in land unlike conventional real
estate projects. The company develops housing for the slum
dwellers free of cost and in return the company gets higher
FSI/TDR on land owned by it. However, SRA projects have
a long-gestation period.

Others
28.6%
Promoter
42.3%
DII
1.0%
Presence in the Mumbai region: Mumbai market is one of

the most stable real estate markets and was the first to
recover post the economic slowdown. The company is a
major player in the Mumbai realty market with 90% of its land
reserve in the Mumbai Metropolitan Region (MMR).
FII
28.2%
Phase I of airport almost completed: HDIL is executing the

largest SRA project for rehabilitation of approximately 85,000
slum dwellers under the expansion & modernization of CSIA,
Mumbai. The phase I of the project is largely complete and
the relocation is expected to be complete within 3 months.
Further, the company plans to commence the phase II of the
project by Q3FY10.
Source: Capitaline
(C Crs)
Sales
FY10
FY09
FY08
FY07
1,502.12
1,728.44
2,380.45
1,204.19
EBITDA
823.77
1,368.77
1,744.30
693.33
Adj PAT
566.57
86.41
1,400.04
541.90
17.35
28.55
64.96
30.44
EPS
Strong revenue visibility: HDIL has launched seven

residential projects of around 5.72 mn sqf post March 2009
and more than 90% of sales have been done in four out of
these. Since the company recognizes revenue on project
completion basis instead of percentage of completion
method most of the revenue from the new launches will
come in FY12 and FY13. Further, the completion of phase I
of airport project will provide the company with TDR
increasing the revenue visibility. The company has land
reserves (including TDR) of 221 mn sqf and currently has 63
mn sqf of projects under construction.
Housing Development & Infrastructure Ltd

Break-up of Ongoing project of 63 mn sqf
Key Concerns
Fall in TDR prices: HDIL generates substantial amount of

revenue from TDR sales in Mumbai. However, the TDR
prices are influenced by regulatory changes apart from the
demand supply dynamics. An increase in FSI in suburbs will
negatively impact the TDR prices.
Concentration in Mumbai region: 90% of land reserves
and all the ongoing projects of HDIL are located in the MMR
region exposing the company to significant concentration
risk. Fall in prices in the region due to oversupply, increase in
decision could impact the valuation of the company.
Residential Projects
Sold
Saleable Area
(mn sqf)
Premier, Kurla
> 95%
1.00
Galaxy, Kurla (E)
> 90%
0.48
Metropolis. Andheri (W)
> 95%
0.65
Majestic, Bhandup (W)
> 40%
1.30
Project
Residency Park, Virar (W)
> 75%
1.25
Harmony, Goregaon (W)
~ 95%
0.04
Meadows, Goregaon (W)
~ 75%
1.00
Project execution risks: HDIL has approximately 63 mn sqf

of projects under construction with 75% of it being the SRA
projects. Any delay in execution of these projects will
Recommendation
With large land bank in the Mumbai market, strong revenue

visibility and being a market leader in the SRA projects, HDIL
is an attractive opportunity for the long term. The company
scores a 3 (out of 5) on our star matrix and has been
assigned the low risk-medium return rating.
Commercial Projects

Leased
/ Sold
Saleable Area
(mn sqf)
HDIL Industrial Park, Virar (W)
> 90%
1.50
Metropolis. Andheri (W)
~ 20%
1.02
Harmony, Goregaon (W)
~ 75%
0.07
Project

Rating -
Indiabulls Real Estate Ltd

CMP: C 194.25
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Overview
Risk
Stock Data
Market Cap
: C 78,020.5 mn
52 week range
: C 298 / C 142
Bloomberg
: IBREL IN
Reuters
: INRL.BO
BSE
: 532832
NSE
: IBREALEST
: 3,910,328
No. of Shares
: 401.7 mn
IBREL has assets in prime areas, huge land bank, a stake in

the growing power sector and is trading at a significant
discount to its book value. We recommend a Strong Buy on
the stock.
Assets in prime areas: IPIT has 3.3 mn sqf of leasable

commercial area, 3.3 mn sqf of saleable residential area and
0.5 mn sqf of additional area in the prime locations (around
Lower Parel) of Mumbai. Even though IPIT forms a small
proportion of the total area to be developed by IBREL it
constitutes majority of NAV due to the high sale & lease
rates in those areas and near-completion stage. The Lower
Parel land (Jupiter & Elphistone mills) was acquired from
NTC in 2005 through an auction process at a consideration
of Rs.7,200 mn. Recently (July 2010-Aug 2010), the
company bought Bharat mill land (8.37 acre) and Poddar mill
land (2.30 acre) for a consideration of Rs.15,040 mn and
Rs.4,740 mn respectively.
Others
15.4%
Indiabulls Real Estate Ltd (IBREL) is a real estate company

engaged in development of commercial properties,
residential properties and SEZs having a pan-India
presence. The company also has presence in power through
its subsidiary Indiabulls Power Ltd (IPL) in which it holds
58.6% of equity. Further, the company has a 52.3% effective
stake (45.3% equity + 7% through fees) in Indiabulls
Properties Investment Trust (IPIT) which is listed in
Singapore. IPIT develops commercial and residential
properties mainly in south central Mumbai. The company
recently bought around 11 acres of mill land in Worli for a
total consideration of Rs.19,790 mn.
Return
DII
3.4%
Sensex: 18167.03
Promoter
22.1%
FII
59.2%
Pojects under construction: IBREL has non-IPIT projects

of 36.2 mn sqf (42.6 mn sqf with 85% IBREL ownership) to
be delivered over next 3-4 years. These projects are located
all across India with majority being in Panvel (20 mn sqf).
The company expects to generate revenues of INR 120,300
mn from these projects over the next 5 years.
Huge land bank which is fully paid for: Apart from IPIT
projects and non-IPIT projects given above were work has
started, IBREL has residential land of 250 acres, commercial
land of 50 acres and SEZ of 2500 acres where work has not
started. All the above land is fully paid for.
Source: Capitaline
(C Crs)
FY10
Sales
FY09
FY08
FY07
129.36
208.61
140.65
13.92
EBITDA
62.70
174.30
622.03
31.15
Adj PAT
-16.02
24.47
131.85
13.98
NM
0.52
13.50
0.03
EPS
Share in the power business: IBREL holds a 58.6% stake

in IPL which was publicly listed in Oct 2009. At IPLs current
market cap, IBRELs stake in IPL is worth C 31,691.3 mn. IPL
is well capitalized and project execution of 2665 MW is
already in progress. IPL plans to have a capacity of 6615
MW (coal-fired) in next 3-4 years.
Indiabulls Real Estate Ltd

IPIT Assets (52.3% effective economics)
Type
Area
(mn sqf)
Remarks
Current price
Commercial
3.3
Nearing
completion
Lease rate of INR 175225 /sqf/month
Residential
3.3
Work started
Selling rate of INR

21,000 /sqf
Unspecified
0.5
To be
finalized
NA
Total
7.1
Non-IPIT Assets Under Development
Location
Area
(mn sqf)
Ahmedabad
1.8
IBREL
ownership
Expected
completion
Residential
100%
FY 12-13
Chennai
4.8
75%
FY 12-13
Gurgaon
6.8
51%
FY 12-13
Hyderabad
0.3
100%
FY 11-12
Madurai
0.2
100%
FY 12-13
Indore
1.5
100%
FY 13-14
Panvel
20.0
100%
FY 13-14
Commercial
Ahmedabad
0.3
100%
FY 12-13
Baroda
0.7
100%
FY 12-13
Gurgaon
3.7
51%
FY 13-14
Indore
0.4
100%
FY 12-13
Thane
0.1
100%
FY 11-12
Panvel
2.2
100%
FY 13-14
Key Concerns
Inexpensive valuations: At CMP, IBREL is trading at P/BV

of 0.83x based on FY10 book value. The company has
already paid for the entire land it owns and its Mumbai land
has been brought during 2005 where prices has increased
considerably compared to the acquisition cost.
Key Concerns
Oversupply in South Central Mumbai: With most of the

real estate players, developing premium properties on the
mill lands in South Central Mumbai region there is a fear of
oversupply in the area. This can slow down the absorption of
properties affecting the NAV of the company.
Low promoter holding: Promoters of IBREL have only
22.1% stake (as on June 2010) in the company. As a result,
the interests of promoters are not very clearly aligned with
those of minority shareholders. Further, ROE delivered by
the company has been historically very low. However, over
the past two quarters the promoter stake has been
increasing gradually from 16.7% to 22.1% indicating the
confidence of promoters in the company.
Project execution risks: IBREL currently has 49.2 mn sqf
(6.6 mn sqf of IPIT and 42.6 mn sqf of non-IPIT) of projects
under execution. Any delay in execution of these projects will
Recommendation
With inexpensive valuations, huge land bank and a stake in

the power business , IBREL is an attractive opportunity for
the long term. The company scores a 4 (out of 5) on our star
matrix and has been assigned the low risk-medium return
rating.

Rating -
Jaypee Infratech Ltd.

Sector: Real Estate
CMP: INR 84.05
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Jaypee Infratech Limited (JIL) is an Indian infrastructure

company engaged in the development of Yamuna
Expressway and related real estate projects. Jaiprakash
associates Limited (JAL) is the parent company currently
owns 83.2% of the shares of the company.
Return
JIL holds the concession from Yamuna Expressway

Authority (YEA) to develop, operate and maintain the
Yamuna expressway. The concession also provides the
right to develop 25 million square meters (approx 6175
acres) of land along the Yamuna expressway at five
locations for residential, commercial, amusement,
industrial and institutional purposes.
Stock Data
Market Cap
: C116,740 mn
52 week range
: C 98.5 / C 76.2
Bloomberg
: JPIN IN
Reuters
: JYPE.BO
BSE
: 533207
NSE
: JPINFRATEC
Avg Daily Vol. (monthly NSE)
: 87153
No. of Shares
: 1,388,933,497
Jaypee Infratechs model consists of earning revenues

from traffic and related facilities on the expressway during
the 36-year concession period and development of
associated real estate pursuant to the concession.
JIL will use the expertise of JAL and JVPL to implement
these projects. We recommend a Buy on the stock.
Public issue
16%
About Jaypee Group
Others
1%
Jaiprakash Associates Limited(JAL) has a market

capitalization of approximately $6.1 billion. Its is the
largest private Hydropower group(700 MW operational).
Jaypee Greens (a brand owned by JAL and accessible for
marketing JILs real estate projects) has established itself
as a strong brand in the real estate micro-market of NCR.
The brand is supported by a marketing team of about 150
employees and a network of more than 200 brokers and
subbrokers.
JAL
83%
The Jaypee group has sold approximately 18000

residential units at the Jaypee greens development in
Noida and close to 1000 exclusive residences at the
Jaypee Greens development in Greater Noida.
Through September 30,2009, the Jaypee group has an
overall market share of approximately 53% of all
residential units sold in Noida according to a report by CB
Richard Ellis.
Source: Capitaline
(CFUV)
FY10
FY09
Sales
640.66
554.54
EBITDA
603.54
317.57
APAT
487.49
266.73
3.98
2.76
EPS
Other Jaypee group companies have been awarded a

concession to develop a 1047 km long 8-lane access
controlled Ganga expressway between Greater Noida and
Ghazipur-ballia and approximately 30000 acres of land
along the Ganga Expressway, a 20.5 km long six lane
inner ring road in Agra wit h approximately 3160 acres of
land for development of land along the inner ring road and
is also constructing a motor racing track which is
expected to host a Formula-1 race in 2011.
Jaypee Infratech Ltd.

Backing from strong promoter Group: Jaiprakash

associates Limited (JAL) is the parent company
currently owns 83.2% of the shares of the company.
Jaiprakash Associates Limited(JAL) has a market
capitalization of approximately $6.1 billion. Its is the
largest private Hydropower group(700 MW operational).
Yamuna expressway significant progress made:
As of 31st March 2010, 81% of the land required for
expressway and interchanges has been acquired from
YEA. There has been substantial progress in the
construction of the expressway, including completion of
100% of clearing and grubbing and 87% of earthwork.
JIL aims to complete the expressway in 2011, ahead of
the date required by the concession, April 2013, which
includes a 3 year extension due to delays in land
acquisition by YEA
Real estate land bank largely paid for and low
cost: JIL has paid roughly 98% of its land cost. It has
taken possession of 3745 acres of real estate
development out of 6175 acres planned. JIL is required
to pay the land acquisition cost and an annual lease
rental of C 100 per hectare to the government of UP. Of
the real estate land bank, 55% is situated within NCR
and was acquired at an average rate of C 2.67 million
per acre
Real estate development integrated townships:
The availability of mostly contiguous land parcels of
1235 acres gives JIL the flexibility to offer an integrated
township product with considerable flexibility of land
usage. The company will develop these parcels for
mixed usage residential, commercial, institutional and
recreational.
Large portion of Yamuna expressway funding in
place: The company has entered into financing
agreements with various lenders for a total of C 72 billion
and has issued equity of about C 20 billion along with an
C 16.5 billion raised through IPO, compared with
estimated project outlay of C 97 billion. As of February
2010 the company has already deployed C 62.5 billion
for the Yamuna expressway project
Yamuna expressway strong competitive position:
NH-2 will be the main competition for Yamuna
expressway. A new expressway will be started only in
consultation with JIL. In case a competing road facility is
allowed and it affects the revenues adversely, the
concession period will extended to compensate for the
loss
Key Concerns
Dependence on JAL: JAL and its affiliates will play a

substantial role in assisting JIL in the capacity of promoter,
board constituent and equity financier as well as in project
execution and marketing. As majority shareholder, JAL can
significantly influence the future policy decision of JIL. Since
JIL depends on JAL for project execution and planning, JAL
will have high discretion in terms of charging for these
services.
Near term, high gearing: Currently, JIL has a Debt-to-equity
ratio of 2.87 in view of the upfront capex requirement. This
ratio may come down after FY12 once the capex for the
expressway is over and the real estate business scales up.
Land acquisition risk: JIL is vulnerable to any delay or
problem in relation to the acquisition of the remaining land by
YEA. Currently, 2% of the land for expressway and 33% of
the land for real estate development is under dispute
Demand tied to UPs Outlook: Since the whole project is
located in western UP, monetization of these projects will be
influenced by the economic progress of this area. Local
issues such as change in government and local law & order
situation will also have some bearing.
Risk of lower traffic volume on expressway: Various
factors could affect traffic density, including the take-up of
real estate development along the expressway, the ability to
cleave out traffic from existing roads like NH-2, increases in
fuel prices and changes in government policies with respect
to toll rates.
Recommendation
Jaypee Infratech has backing of a strong brand of Jaypee

group. Yamuna expressway project remains a promising
project because of the large land bank and residential
projects. The stock is a good buy in the medium to long
term. It has been awarded a low risk medium return
investment and a 4 star on our 5-star rating system.

Rating -
Kolte Patil Developers Ltd

CMP: C62.7
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Kolte Patil Developers Ltd (KPDL) is a Pune-based real

estate company having operations mainly in Pune &
Bangalore. The company develops residential buildings,
commercial properties & IT parks. The company has a land
bank of around 37.80 mn sqf.
Return
KPDL has a debt to equity ratio of only 0.22x, has 5.5 mn

sqf of projects under execution and is currently trading at a
significant discount to its book value. We recommend a
Strong Buy on the stock.
Stock Data
Market Cap
: C4,745.1 mn
52 week range
: C 76.0 / C 42
Bloomberg
: KPDL IN
Reuters
: KOLT.BO
BSE
: 532924
NSE
: KOLTEPATIL
: 269,674
No. of Shares
: 75.6 mn
Inexpensive valuations: KPDL has a book value of INR

88.00 with land being valued at historical cost. Most of the
land is in Pune & Bangalore which are hot property market
due to the presence of IT industry. The company is currently
trading at a significant discount to its book value.
Earnings visibility: As of March 2010, KPDL has completed
34 projects including 31 in Pune and 3 in Bangalore. This
includes 20 residential complexes, 7 commercial complexes,
3 commercial cum residential use and 4 IT parks. Further,
the company currently has 5.5 mn sqf under execution.
DII
0.2%
Others
22.0%
Joint Ventures: KPDL has formed different JVs with ICICI

Ventures, Yatra Capital, Portman Holdings, Arora Int. to
develop residential projects, commercial projects and
integrated townships. The JVs help the company to bring the
required money for the project and also share the risk
associated with the project.
FII
3.4%
Promoter
74.4%
Strong balance sheet: As on March 31, 2010 the debt to

equity ratio of the company was only 0.22x which provides
enough scope for further leveraging which might be needed
for current and proposed Key
project
financing.
Concerns
Concentration in one geographical segment: All the

projects of KPDL are located in Pune & Bangalore, where
the real estate development is largely influenced by the IT
industry, exposing the company to significant concentration
risk. Fall in prices in the region due to oversupply, increase in
decision could also impact the valuation of the company.
Project execution risks: KPDL currently has 5.5 mn sqf
under execution. Any delay in execution of these projects will
Source: Capitaline
(C Crs)
FY10
FY09
FY08
FY07
Sales
75.08
176.34
421.32
230.28
EBITDA
46.75
119.74
188.21
114.45
Adj PAT
30.31
42.12
132.61
68.68
3.76
9.08
17.32
14.81
EPS

Kolte Patil Developers Ltd

Ongoing projects
Project
Location
Details
Glitterati by 24 K
Aundh, Pune
High-end luxurious project launched in Oct 2009. Out of the 1.5

mn sqf proposed development, 0.5 mn sqf already launched
Margosa Heights
Mohammadwadi, Pune
Affordable housing project launched in Dec 2009. 2 & 3 BHK

apartments.
Integrated development project
Kharadi, Pune
Mixed use development of 2 mn sqf.
Integrated township
Hinjewadi, Pune
To be developed on 421 acres of land and the first phase of 3

mn sqf to be launched in Q2 2010.
Recommendation
With low debt to equity ratio and CMP which is at a significant discount to its book value, KPDL is an attractive opportunity
for the long term. The company scores a 3 (out of 5) on our star matrix and has been assigned the low risk-high return
rating.
Mahindra Lifespace
Developers Ltd

Rating -
CMP: C500.55
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Mahindra Lifespace Developers Ltd (MLDL), formerly known

as Mahindra Gesco Developers Ltd, has two successful
synergistic core business areas under Mahindra Lifespaces
focusing on residential and commercial projects and
Mahindra World City (MWC) focusing on Integrated Business
Cities. The company has completed over 5.88 mn sqf of real
estate development. MLDL has forthcoming projects and
land bank of around 20 mn sqf. Also it has 4,600 acres under
management through World Cities.
Return
Stock Data
Market Cap
: C20,437.5 mn
52 week range
: C 550 / C 295
Bloomberg
: MLIFE IN
Reuters
: MGDL.BO
BSE
: 532313
NSE
: MAHLIFE
Avg Daily Vol. (1 month NSE)
: 74,611
No. of Shares
: 40.8 mn
MLDL has a healthy balance sheet, presence in SEZ

development and has good revenue visibility. We
recommend a Strong Buy and award low risk-medium
return rating to the company.
Strong Balance Sheet: MLDL has a debt-equity ratio of

0.43x which provides enough scope for further leveraging
which may be needed for current and proposed project
financing.
Others
15.0%
DII
11.9%
Promoter
51.1%
FII
21.9%
Pioneer in developing SEZ in the private sector: MLDL

was the first to develop SEZs in the private sector. The
company has 6 sector specific SEZs currently notified and 4
operational at the two World Cities. MWC Chennai was
Indias first integrated business city in PPP mode. It is spread
over 1550 acres and has 3 SEZs, a domestic tariff area and
325 acre integrated township area. MWC Jaipur is a 3000
acre integrated business city with a multi-product SEZ and a
domestic tariff area.
Upcoming projects: MLDL (excluding MWC) has ongoing
projects of 2.31 mn sqf, forthcoming projects of 4.81 mn sqf
and a land bank of 15.29 mn sqf. The projects and land bank
is located across Chennai, Mumbai, Pune, NCR, Nagpur,
Hyderabad, Nasik and Bangalore. Around 71% of the
ongoing projects have been sold and they are progressing as
per schedule.
Key Concerns
SEZ laws: MLDL has a presence in SEZ development. Any

adverse government policy with respect to SEZs especially
tax benefits could reduce the attractiveness of SEZs for
companies which would impact the revenue generation of
MLDL.
Source: Capitaline
(C Crs)
FY10
FY09
FY08
FY07
Sales
417.87
341.78
231.08
216.35
EBITDA
134.76
101.95
98.93
38.48
Adj PAT
71.29
64.01
58.37
17.91
EPS
18.07
15.36
15.55
3.92

Mahindra Lifespace Developers Ltd

Forthcoming Projects & Land Bank
Location
Project
Summary of Projects
DFP (mn sq.ft)
Forthcoming projects
Mumbai
NCR
Chennai
Nagpur
Ongoing
Forthcoming
Land bank
Chennai
0.37
1.95
11.00
Ghatkopar Project
0.20
Mumbai
0.95
0.60
0.59
Eminente Phase 3
0.15
Pune
0.33
2.10
GE Garden* (R&C)
0.25
NCR
0.66
0.93
Aura subsequent
phases
Nagpur
1.33
0.93
Hyderabad
1.00
Aqualily subsequent
phases
1.15
Nasik
0.60
Iris Court
0.80
Bangalore
MIHAN Project
1.33
Total
2.31
4.81
15.29
Total
4.81
Land bank
Nasik
Location
Satpur
0.60
Pimpri Project
0.30
Pune
Pimpri Residential
1.80
Hyderabad*
Kukatapally
1.00
Chennai
MWC Chennai
Mumbai
Thane
Recommendation
With a healthy balance sheet, presence in SEZ development

and good revenue visibility, MLDL is a good investment for
long term. The company scores a 4 (out of 5) on our star
rating.
11.00
0.59
Total
15.29
*Joint development
Status of Ongoing Projects
Location
Mumbai
NCR
Pune
Chennai
Total, Avg
Project Name
Launch
date
Last Selling
Price (/sqf)
Total
mn sqf
units
% sold
(area)
Expected
Completion
Date
Splendour Phase 1
Q4 FY08
7,300
0.416
264
99%
Jun-11
Splendour Phase 2
Q4 FY10
7,300
0.385
246
43%
Jun-12
Eminente Phase 2
Q1 FY10
9,000
0.148
68
89%
Mar-12
Chloris
Q1 FY09
4,200
0.391
160
54%
Dec-10
Aura Phase 1
Q3 FY10
2,450
0.269
231
100%
Mar-12
Royale Phase 3
Q1 FY09
2,900
0.111
84
92%
Nov-10
Royale Phase 4
Q2 FY10
3,000
0.22
168
99%
Mar-11
Aqualily Villas Phase 1, 2
Q4 FY10
3,950
0.225
74
52%
Sep-11
Aqualily Apts Phase 1
Q1FY11
2,950
0.144
80
2%
Sep-12
5000 (Wt.
Avg.)
2.309
1,375
71%

Rating -
Nitesh Estates Ltd

CMP: C40.65
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Nitesh Estates Ltd (NEL) is in the business of real estate

development and is primarily engaged in the development of
residential projects in Bengaluru. The company is in the
process of diversifying into the development of shopping
malls and is expanding its reach to Chennai, Goa and
Hyderabad. The company is developing its first hospitality
project, the first Ritz-Carlton brand hotel in India, on
Residency Road in the central business district of Bengaluru.
Since its incorporation in 2004, the company has developed
three residential projects totaling 0.55 mn sqf of Saleable
Area and Developable Area.
Return
Stock Data
Market Cap
: C 5928.0 mn
52 week range
: C 55 / C 35
Bloomberg
: NITEIN
Reuters
: NITE.BO
BSE
: 533202
NSE
: NITESHEST
: 268,519
No. of Shares
: 145.8 mn
NEL got listed on BSE and NSE on May 13, 2010. The
company has seen a fall in share price of more than 25%
from its IPO price of C 54. We believe the company can
provide good returns from these levels. We recommend a
Buy at these levels and award low risk-medium return rating
to the company.
Asset light model: NEL undertakes most of its projects

through the joint-development model as compared to
acquiring a freehold or leasehold interest in the land. This
model reduces the upfront land acquisition and total project
financing costs. This provides the company with the financial
leverage to deploy capital towards development expenses,
therefore reducing need for project financing and enabling it
to undertake further expansion of our operations.

Others
9.4%
Promoter
40.9%
DII
24.2%
FII
25.6%
Upcoming projects: NEL has 7 ongoing projects of 2.09 mn

sqf and 4 forthcoming projects of 1.55 mn sqf making a total
of 3.64 mn sqf. Further, the company has land bank of
132.62 acres (including partners share) for future
development. Most of this land is located around Bengaluru.
Focus on residential market: Out of the total projects of

3.64 mn sqf, 73% of the development is in residential as the
company intends to keep its focus on residential market.
Further, the company wants to focus on middle-income
housing segment which faces a supply shortage and hence,
wants to leverage the same.
Source: Capitaline
(C Crs)
Sales
FY09
FY08
FY07
FY06
86.79
63.36
20.29
21.63
EBITDA
6.87
2.67
5.30
2.86
Adj PAT
2.76
1.12
2.87
1.38
EPS
4.06
1.46
4.89
5.02
Strong institutional interest in the IPO: At the time of IPO,

despite being a small-sized issue NEL was able to rope in
Halbis Capital (division of HSBC), Nomura, HDFC MF and
SBI MF as anchor investors. As per the shareholding of June
30, 2010 other large institutional investors in the company
include Och-Ziff Captial Management, LIC and Blackrock
India.
Nitesh Estates Ltd

Summary of Projects
Type
No. of
Projects
Area
(acres)
Key Concerns
Saleable Area
(mn sqf)
Ongoing Projects
Residential
21.91
1.69
Hospitality
2.58
0.10
Office
2.65
0.30
27.14
2.09
Sub-Total
Forthcoming projects
Residential
51.57
0.97
Shopping Mall
5.06
0.97
56.63
1.55
Sub-Total
Land Parcels Available for

Future Development
132.62
Total
216.39
3.64
Suspension of ongoing projects: The construction activity

in respect of two of NELs ongoing projects, Wimbledon
Gardens
(Residential)
and
Wimbledon
Gardens
(Commercial), has been suspended as the company is
currently in the process of redesigning the development
plans. If the company is not able to recommence such
construction, then its business, results of operations, cash
flows and financial condition may be adversely affected.
Concentration in one geographical segment: Majority of
NELs projects are located around Bengaluru. Fall in prices
in the region due to due to the slowdown in IT sector,
oversupply, increase in construction costs or any adverse
government policy decision could impact the valuation of the
company. However, the company has already started
developing properties in other cities of the country.
Limited execution history: NEL has executed only 3
residential projects totaling 0.55 mn sqf which were of
premium segment. The company now wants to enter the
middle-income housing segment and has no prior developing
& marketing experience of the same.
Recommendation
NEL has an asset light model with a focus on residential

market. The share price has already seen a fall of 25% from
the IPO price. We believe NEL is an attractive opportunity for
the long term. The company scores a 3 (out of 5) on our star
rating.

Rating -
Orbit Corporation Ltd.

CMP: C 131.95
Sector: Real Estate
Nifty: 5452.1
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Orbit Corporation Limited(OCL) is a real estate

construction and development company with primary
focus on redevelopment of existing properties. OCL
endeavours to specialize in developing, designing and
managing Build to suit high-end residential and
commercial properties.
Return
Its directors have over 18 years of experience in the real

estate sector and have been involved in redevelopment
in their personal capacities till FY 2000. OCL was
incorporated in 2000.
Stock Data
Market Cap
: C14,509.2 mn
52 week range
: C178 / C83
Bloomberg
: ORB.IN
Reuters
: ORCP.BO
BSE
: 532837
NSE
: ORBITCORP
: 496148
No. of Shares
: 54,980,945
It is totally focused towards Mumbai and is currently

developing 4.8 msf. It has plots in andheri, santacruz,
napeansea road, lower parel and also a plot in Mandwa.
The total NAV of its projects is C 2103.8 crore
OCL is a ISO 9001:2000 certified company. The
subsidiaries of OCL are orbit construction and realtors
private limited, orbit buildcon and realty private limited
and orbit housing private limited.
Geographic distribution of Land Bank
Others
35.2%
Promoter
43.5%
DII
2.8%
FII
18.5%
Q1FY11 revenue breakup
Source: Capitaline
FY10
FY09
FY08
FY07
FY06
Sales(CFU
487.11
283.53
417.03
30.89
0.72
EBITDACFU
161.31
93.55
222.46
9.32
0.54
APATCFU
95.97
37.66
166.63
7.77
0.09
EPSC
17.04
10.38
45
2.86
0.04
Orbit Corporation Ltd.

Key Concerns
Focus on attractive Mumbai Land Bank: OCL is

primarily focussed on redevelopment of dilapidated
buildings in Mumbai which has support of the Mumbai
government. Further, OCL has been able to get an
attractive land bank(4.8msf) despite the land scarcity in
Mumbai. Redevelopment is considered a high
profitability margins business because of low cost of
acquisition. Also OCL has been able to get very
attractive plots in Mumbai e.g. Napeansea Road
Very high realization from certain key projects:
Because of its projects being at prime locations, OCL is
able gets very high realizations in the range of C40000
per square foot. In most of its current projects, it would
be able to generate more than C10000 per square foot.
Project wise Breakup
High Gearing: The debt-to-equity ratio remained around 1x

for the last few quarters. However, they may require to
increase their debt levels further to generate the cash for their
land purchases. Currently, the outstanding stands at C 889
crore.
Success of Mandwa project: The Mandwa project forms
50% of the land base of OCL. Thus the success of this project
will form a key to the future prospects of the company.
Problems in the redevelopment business: OCLs business
requires getting consent from at least 70% of the tenants,
consensus between various groups of tenants, providing
accommodation to the tenants during the interim period of
demolition and construction, and rehabilitation of the
occupants. Delay in any of the aforesaid activities could have
adverse implications on the company.
Recommendation
Villa Orb
0.1
Orbit Arya
0.1
Orbit Haven
0.0
Orbit Corporation Limited has good future prospects

because of its attractive land and high realizations per
square foot from its projects. It is a good buy from a
medium to long term perspective. It has been assigned a
low risk medium return and a rating of 3 on a scale of 5 on
our 5-star rating.
Orbit Residential
0.3
Orbit Terraces
0.3
Orbit Grand
0.1
Mandwa
2.4
NS Roadblock
0.3
Location
Orbit Sky Chateau
Saleable area(msf)
Villa Orb Annex
0.1
Orbit Grandeur-Santacruz
0.3
Lalbaug
0.9
Total residential
4.8

Rating -
Peninsula Land Ltd

CMP: C68.95
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Peninsula Land Ltd (PLL) is a real estate developer with

presence in Mumbai, Pune, Goa, Nashik and Hyderabad.
The company has a significant presence in up-scale South
Mumbai market. The company has specific brand names like
Ashok for residential properties, Peninsula for commercial
properties and Crossroads for retails properties. The
company developed the first world-class mall in India and
was also the first to commercially develop a textile mill in
Mumbai.
Return
Stock Data
Market Cap
: C19,250.8 mn
52 week range
: C 101 / C 62
Bloomberg
: PENL IN
Reuters
: PENL.BO
BSE
: 503031
NSE
: PENINLAND
: 229,162
No. of Shares
: 279.2 mn
PLL has a strong balance sheet and good revenue visibility

with upcoming projects in the Mumbai market. We
recommend a Buy at these levels and award low riskmedium return rating to the company.
Strong financials: PLLs revenues have grown by a CAGR

of 31% during past three years. During FY09, the revenues
of the company showed a healthy increase when most other
players reported decline in revenues due to falling prices.
ROE and ROCE of the company also have been very
healthy with both being above 25% for FY10.

Others
21.3%
DII
4.9%
Promoter
53.7%
FII
20.2%
Strong balance sheet: As on March 31, 2010 PLL had

loans of around INR 4,671 mn compared to cash & bank
balance of around INR 6,502 mn implying a negative net
debt. The debt to equity ratio of the company stood at 0.37x
which provides enough scope for further leveraging if needed
for current and proposed project financing.
Upcoming projects: PLL has around 500 acres of land
bank with potential development of 28 mn sqf over next 3 to
5 years. Currently, the company is executing around 15.40
mn sqf out of which 3 mn sqf is expected to be complete in
FY11. The entire 3 mn sqf would be coming in Mumbai.
Expanding outside Mumbai: To reduce its dependence on

the Mumbai region PLL is developing properties in other
cities like Pune, Goa, Nashik and Hyderabad. This includes
residential properties and SEZs. Out of the above, the
premium residential project Ashok Beleza in Goa is already
under execution.
Source: Capitaline
(C Crs)
FY10
FY09
FY08
FY07
Sales
778.62
565.63
357.36
327.21
EBITDA
359.95
201.34
180.78
153.7
Adj PAT
286.18
157.15
146.8
153.48
8.68
5.11
4.59
40.25
EPS
Timely execution and brand name: PLL has emerged as a

successful developer mainly due to its timely execution
abilities. Further, the company has been able to develop
establish brands in all categories which has not been
possible with most real estate players. The company is
known for being the first to develop a world-class mall in
India and commercially develop a textile mill in Mumbai.
Peninsula Land Ltd

Summary of Projects
Project
Type
Key Concerns
Area
Projects under execution

Peninsula Business
Park
Commercial
1.2 mn sqf
Peninsula Technopark
Commercial
0.9 mn sqf
Projects in pipeline
Nasik project
Group housing &

residential
Betim, Goa project
Premium
residential
18 acres
0.5 mn sqf
Concentration in one geographical segment: Currently,

PLL is heavily dependent on the Mumbai region for its
revenues. Fall in prices in the region due to oversupply,
increase in construction costs or any adverse government
policy decision could impact the valuation of the company.
However, the company has already started developing
properties in other cities of the country.
Project execution risks: PLL is expected to complete the
28 mn sqf of projects in the next 3 to 5 years. Despite its
proven timely execution skills, any delay in execution of
these projects will significantly impact the valuation of the
company.
Recommendation
With a strong balance sheet, brand name and good revenue

visibility, PLL is a good investment for long term. The
been assigned the low risk-medium return rating.

Rating -
Puravankara Projects Ltd.

CMP: C118.95
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Sensex: 18167.03
Overview
Risk
Puravankara Projects Ltd (PPL) is a Bangalore based real

estate developer is one of largest players in Southern India.
The company which has majority of operations in Bangalore
is diversifying to other cities in South India, Kolkata, Colombo
and UAE. The company develops affordable housing
projects through its 100% subsidiary, Provident Housing Ltd
(PHL) under the Provident brand and develops premium
segment projects under Purva brand.
Return
Stock Data
Market Cap
: C 25,393.4 mn
52 week range
: C 137 / C 76
Bloomberg
: PVPK IN
Reuters
: PPRO.BO
BSE
: 532891
NSE
: PURVA
: 402,242
No. of Shares
: 213.4 mn
PPL has a healthy balance sheet, made a successful entry

into affordable housing and has good revenue visibility with
upcoming projects in the premium and affordable housing
segment. We recommend a Buy at these levels and award
low risk-medium return rating to the company.
Successful entry into affordable housing: PHL launched

two affordable housing projects totaling 2.5 mn sqf in
Bangalore and Chennai. Around 75% of the area has been
sold while 30% of construction is complete. The company
plans to launch another 6 mn sqf under the Provident brand
in FY11.
DII
1.5%
Promoter
90.0%
Others
2.3%
FII
6.2%
Upcoming projects and extensive land bank: PPL has

total of 143.25 mn sqf of developable area and 118 mn sqf of
saleable area. Presently, the area under development is
20.25 mn sqf (saleable area of 11.73 mn sqf) with 14
ongoing residential projects and two commercial projects
spread across geographies of Bangalore, Chennai, Kochi
and Kolkata. The company plans to launch 12 mn sqf of
residential project under the Purva brand. Together with the
6 mn sqf of Purva brand the total launches for FY11 is 18 mn
sqf. The company has given a sales guidance of 3 mn sqf for
FY11.
Healthy balance sheet: As on June 30, 2010 PPL has net
debt to equity ratio of 0.57x which is at comfortable level.
Further, the debtors also continue to be under control.
Source: Capitaline
(C Crs)
FY10
FY09
FY08
FY07
Sales
478.36
444.91
565.81
416.86
EBITDA
308.53
266.46
333.99
191.26
Adj PAT
145.32
144.42
240.05
129.1
6.64
6.77
10.91
6.56
EPS
Joint Ventures: PPL was the first to obtain FDI in the Indian
real estate industry through its joint venture with Singapore
based Keppel Land Limited. The joint venture company,
Keppel Puravankara Development Private Limited, has
ongoing housing projects in two Bangalore and Kolkata with
a developable area of 7.85 mn sqf. The company also has a
MoU with Homex of Mexico to undertake projects in
affordable housing segment. The JV for the same is
expected to be signed soon and two projects would be
launched.
Diversifying outside Bangalore: PPL has been traditionally
focused on the Bangalore and is now expanding to other
southern cities like Kolkata, Mysore, Kochi and Chennai.
Further it has also expanded into overseas markets like
Colombo and UAE.
Puravankara Projects Ltd

Summary of Projects
Project
Location
Key Concerns
Saleable
Area
(mn sqf)
Residential
Atria-I (62%)
Sanjay Nagar, Bangalore
0.15
Elita
Promenade
(49%)
JP Nagar, Bangalore
1.25
Venezia
Yelhanka, Bangalore
2.09
Highlands
Mallasandra, Bangalore
1.36
Grand Bay
Marine Drive, Kochi
0.50
Eternity
Kakkanad, Kochi
0.80
Swan Lake
OMR, Chennai
0.83
Moon Reach
Airport-Seaport Rd, Kochi
0.15
Oceana
Marine Drive, Kochi
0.26
Atria Platina
(62%)
Sanjay Nagar, Bangalore
0.09
Elita Garden
Vista (36%)
Rajarhat, Kolkata
0.44
Purva
Skywood
Sarjapur Road, Bangalore
0.69
Cosmo City
Pudupakkam, Chennai
1.50
Wellworth City
Doddaballapur Rd,
Bangalore
1.15
11.27
Commercial
Moneto
Chennai
0.36
Primus (60%)
Chennai
0.10
Total

Recommendation
With a healthy balance sheet, successful entry into

affordable housing and good revenue visibility, PPL is a good
investment for long term. The company scores a 3 (out of 5)
on our star matrix and has been assigned the low riskmedium return rating.
Sub-total
Sub-total
Concentration in one geographical segment: A large part

of PPLs NAV comes from the Bangalore region. Fall in
prices in the region due to oversupply, slowdown in the IT
industry, increase in construction costs or any adverse
government policy decision could impact the valuation of the
company. However, the company has already started
developing properties in other southern cities to mitigate this
risk.
0.46
11.73

Rating -
Sobha Developers Ltd

CMP: C 365.1
Sector: Real Estate
Nifty: 5452.10
Risk Return Matrix
Overview
Risk
Sobha Devlopers Limited(SDL) is the largest real estate

player in southern part of India , in terms of revenues,
earnings and market capitalization. It was incorporated in
1995 and is promoted by Mr. PNC Menon. The company
was listed in 2006 and raised C5.69 billion through IPO.
Subsequently, in 2009 it raised C5.27 billion through a QIP.
Return
As of March 2010, SDL has a land bank of 119msf(million

square foot) spread across 10 cities. The developable
potential area available on the entire land bank including
the FSI is 244msf. The total cost of the land bank is about
C2362 crore, which leads to the average cost of land to
C187 per square feet and land cost of saleable FSI cost is
C98 per square foot.
Stock Data
Market Cap
: C36,326.3 mn
52 week range
: C/ C 197
Bloomberg
: SOBHA.IN
Reuters
: SOBH.BO
BSE
: 532784
NSE
: SOBHA
: 120292
No. of Shares
: 98,063,868
Since its inception the company has developed 36.34 msf

of land. In the past 5 years the company has developed
30.4 msf. Of the total ongoing projects SDL is currently
developing residential projects of 8.5 msf, 4.24 msf of
contractual projects and about 0.58 msf of commercial
projects totalling to 13.32 msf of ongoing projects. The
company is expected to launch over 7.22 msf in FY11.
Others
5.4%
DII
9.7%
Sensex: 18167.03
FII
24.3%
Promoter
60.6%
The companys residential projects include luxury, superluxury and middle-income apartments, villas, row-houses
and plots. The company also undertakes contractual
projects for clients( Infosys accounts for 85% of their
business).
One of the key factors that sets Sobha apart from other
developers is its backward integration model which
includes a concrete block making plant, metal and glazing
factory, interiors and wood working factory and mechanical,
electrical and plumbing department.
Geographic distribution of Land Bank
Source: Capitaline
FY10
FY09
FY08
FY07
Sales(CFU
1117.4
983.87
1443
1194.8
EBITDACFU
259.72
286.72
367.4
262.6
APATCFU
136.33
109.64
228.26
161.48
13.51
14.88
30.21
21.15
EPSC
Sobha Developers Ltd

Land Bank Breakup
Investment rationale
Strong brand and execution track record : It has a

strong brand name in South India and has developed 30.04
msf in the last 5 years and 36.34 msf since inception. It has
an in-house capacity to deliver 10 msf every year.
Strong player in the Bangalore market: Bangalore, being
the IT capital of India, offers an affluent customer base. It
has strong presence in Bangalore (77% of ongoing
projects/new launches and 35% of developmental
potential).
Key Concerns
Focused towards South India: SDL is focused towards

South India which makes susceptible to any local
regulatory changes. Any adverse regulatory changes
may affect it negatively. SDL is looking for new projects in
other parts of the country but this is still a small portion of
its project portfolio.
High gearing: The debt repayment of C399.5 crore has
helped the company to reduce the debt from C1,932.2
crore in FY09 to C1,474 crore in FY10. The total debt-toequity ratio reduced from 1.87 to 0.82 in FY09 and FY10
respectively. The company expects to be debt free by
FY13, as it is expected to repay about C450 crores every
year till FY13. However, in spite of healthy cash flows,
SDL may be required to sell off some of its land to reduce
its debt in that time frame.
Catering to premium segment: SDL is focused on
projects which cater to the premium segment. The city of
Bangalore with its affluent IT workforce provides a good
customer base. However, once SDL moves to other cities
it may have to focus towards affordable housing and
houses which are in C20-30 lakh range in contrast to C4050 lakh range(assuming a flat of 1100 square foot and a
realization of C4000 per square foot).
Recommendation
SOBHA Developers has good execution track record and

strong presence in the affluent Bangalore market. It also
gets support from its contract based contraction business. It
also has an integrated model which improves its execution
levels.
It is as a good buy in the medium to long term. It has been
awarded a low risk - medium return and a 3 star on our
5-star rating system.
Healthy cash flows to Reduce debt: SDL has 7.78 msf of

ongoing projects (of which 4.39 msf has been sold) which
are expected to generate net cash flows of C11.9 billion.
Furthermore, it plans to launch 5.9 msf of new projects in
the next year which will contribute to another C10.7 billion.
SDL plans to reduce its D/E ratio to 0.5x from its current
0.82x in march 2010.
Strong presence in contract-based construction: SDL is
the preferred contractor for Infosys and has constructed 22
msf in the contractual business which accounts for 15-20%
of the companys consolidated annual revenues. SDL
currently has a construction book of C.5 billion (4.24 msf).
Low cost Land Bank: SDL has a total land bank of 119
msf and the developable potential including FSI is 244 msf.
The total cost of land bank is C2362 crore. This leads to an
average cost of land to C187 per sqaure foot and the
saleable FSI cost is C98 per square foot. On companys
average realization of C4000 per square foot, it enjoys a
margin of C1800 per square foot after considering average
construction cost of C2000 per square foot and land cost of
C187 per square foot.
Backward integration : The integrated model helps the
company to have in-house expertise at every stage from
conceptualization to completion of the project. This ability is
a competitive advantage enabling the company to offer
complete end-to-end solutions to its clients and also
augment its revenues. The integrated business model
provides three main advantages (1) Higher margins as
compared to peers (2) Better quality products (3) Timely
execution of the projects.

Rating -
Unitech Ltd.
CMP: C88.10
Sector: Real Estate
Nifty: 5452.10
Sensex: 18167.03
Risk Return Matrix
Risk
Stock Data
Market Cap
: C221,823 mn
52 week range
: C118 / C65
Bloomberg
: UT IN
Reuters
: UNTE.BO
BSE
: 507878
NSE
: UNITECH
: 8,279,150
No. of Shares
: 2,517,857,828
Others
17.5%
FII
32.6%
Overview
Unitech Limited is a company which was started by four

civil engineers in 1971. The company has grown today
into a real estate giant with diverse interests in areas such
as property management & consultancy services,
construction & transmission towers and telecom.
UNITECH had its IPO in the Indian market in 1986.
Return
DII
3.3%
Date: August 13,2010
Promoters
46.7%
Unitechs Land Bank
Real estate accounts for 83.6% of the companys total

business. Within real estate, the company has presence
in all segments residential, retail,
entertainment,
hospitality, commercial and SEZ. It has one of the most
geographically diversified land banks among the real
estate developers in India. As of 31 March 2009, these
land reserves amounted to 11,178.52 acres. Of these,
approximately 6,406.18 acres of land have been allotted
or agreed to be allotted to the Group by State
Governments and their agencies, and approximately
4,772.34 acres of land have been acquired or agreed to
be acquired by the Group from private parties. As of 31st
March 2009, land available to the Company was 7,466.78
acres. Unitech showed 20 times growth in value of work
undertaken between FY2003 and FY2008.
Unitech had a rough patch during the 2008-09 financial
crisis because of its high debt. It has been able to bale
itself out of the situation by selling off some of its assets
like its Marriott Courtyard hotel, Gurgaon and
restructuring its debt. It also operationally exited its
telecom operations. It has also changed its strategy. In
residential segment the company plans to focus on
building affordable housing(in the range of C10-25 lakhs)
under the name Unihomes. In the commercial segment,
the company plans to adopt a strata model rather than a
lease model.
The most recent foray of the company was in telecom.
Unitech Wireless received pan-India telecom licenses viz.
unified access service license (UASL) in all 22 telecom
circles. In 2009, they received a spectrum of 4.4 MHz in
21 telecom circles. Telenor has agreed to acquire
67.25% stake in Unitech Wireless and will infuse C 61.2
billion of investment into the company. Unitech, through
its subsidiaries, holds the remaining stake.
C
Sales(Cr)
FY09
FY08
FY07
FY06
1837
2804.1
2503.9
653.3
EBITDA(Cr)
1688.8
1767.4
1543.1
148.3
Adj PAT(Cr)
730.3
1001.3
962.06
69.71
4,53
6.31
12.03
53.93
EPS
Unitech Ltd.
Strong experience in Real estate: Unitech has

completed real estate development of over 24 million
square foot. It has developed 6 townships of 1400 acres
as of January 2010. It claims to have made sales of
around 16.6 million square foot. It has presence in
residential space, commercial space,
entertainment
space, hospitality, SEZs and property management.
Diversified land bank : Unitech is one company which
has land bank spread across the country. The current
land holding stands at around 7500 acres. The presence
of this diversified land bank will allow it to prioritize its
development activities based on the economic and
regulatory conditions
Diversified business: Since real estate is a cyclical
business, Unitechs diversified businesses will provide it
some protection in downturns. Unitechs property
management arm, Unitech Property Management Private
Limited(UPMPL), currently manages over 10.3 million
square foot. Unitech also has also presence in
construction and infrastructure projects (order book of C
22 billion)as well as manufacturing of power transmission
and telecom towers(order book of C5.1 billion). The
company also has a 32.75% stake in Unitech Wireless
through its subsidiaries.
Telecom Business: Unitech Wireless received pan-India
telecom licenses viz. unified access service license
(UASL) in all 22 telecom circles. In 2009, they received
a spectrum of 4.4 MHz in 21 telecom circles. The
company had 4.2 million subscribers as of March 2010.
Unitech has partnered with Telenor and operationally
exited, Unitech Wireless. Telenor has invested C61.4
billion for a 67.25% stake.
Strong execution capabilities and Brand Value: The
company has developed strong execution capabilities
over the years in providing cost effective construction and
development solutions. The company has expertise
across real estate housing projects, including townships,
corporate offices , residential complexes and industrial
projects. Unitechs property management subsidiary,
Unising Projects Private Limited (UPPL),
is ISO
9001:2000 certified. Since Unitech has develop projects
across the country, it is a brand name recognized across
the country. It was given the title of Superbrand by
Superbrand India in October 2007.
Evolving strategies: The company has shifted its
strategy
towards
development
of
affordable
housing(within the range of C10 lakhs to C50 lakhs). The
company is building affordable housing in the range of C
10 lakhs to C25 lakhs, under the name Unihomes. In
cities like Mumbai, Unitech has acquired low cost land
through slum rehabilitation program. There are already
15 projects running . The total land size is 145 acres of
which 60 acres are private land. The project covers
around 30,000 slum dwellers.
Key Concerns
High Debt: As of March 2009, the company has a total

debt of C9055 crore as compared to C10,900 crore on
March 2008. this corresponds to a D/E ratio of 3.16
compared to a D/E ratio of 3.55 a year earlier.
It was however successful in raising C1621 crore through
QIP route and was also able to restructure its debt.
Although this provided some relief, the debt still remains
high. This may have negative effects in the future.
Slum rehabilitation in Mumbai Market: Although
Unitech has taken up the ambitious project of acquiring
land through slum rehabilitation, the success of this
project still remains to be seen. So far, consent has been
obtained from over 30% of the slum dwellers.
Managing pan-India projects: Although having a panIndia land bank has advantages, it involves more
coordination.
Source: Capitaline
Recommendation
Unitech is a established player in the Indian real estate

market and one of the few that has a pan-India presence.
Besides real estate development it also draws revenues from
other businesses such as property management, and
manufacturing of power transmission and telecom towers.
Recently, it also diversified into telecom.
It has a strong brand value and execution capabilities. It has
a large land bank for development of its future projects.
The stock is a good buy in the medium to long term. It has
been awarded a low risk medium return and a 4 star on
our 5-star rating system.
Methodology
Risk Reward Matrix: We use risk reward matrix to recommend companies that are currently a good buy. At times we may find a very good company but it may
be trading at very high price, reducing the Reward from investing in it. And at other times we may find an average company available at deep discount,
substituting the little risk with higher Reward. We consider the companies risk, potential upside and stocks current market price among others while placing a
company in the risk reward matrix.
Star Rating: We use star matrix to highlight the inherent strength of the company. We consider the following areas when awarding Star Rating to a company.
1.
Investor Friendliness
2.
Growth (profit, sales & margins)
3.
Management Quality
4.
Historical Performance
5.
Group Financial Strength
6.
Management Aggression and Ability
7.
Management Vision
The scale if from 1 to 5 with 5 being the best.
Disclaimer
Ideas1st Research is a registered trademark of Ideas1st Information Services Private Limited.
Ideas1st Information Services Private Limited is neither authorized nor regulated by the Financial Services Authority.
This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other
person. Persons into whose possession this document may come are required to observe these restrictions.
This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as
an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It is for the general
information of clients of Ideas 1st Information Services Pvt. Ltd. It does not constitute a personal recommendation or take into account the particular investment
objectives, financial situations, or needs of individual clients.
We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness
cannot be guaranteed. Neither Ideas 1st Information Services Pvt. Ltd., nor any person connected with it, accepts any liability arising from the use of this
document. The recipients of this material should rely on their own investigations and take their own professional advice. Price and value of the investments
referred to in this material may go up or down. Past performance is not a guide for future performance. Certain transactions -including those involving futures,
options and other derivatives as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. Reports based on
technical analysis centers on studying charts of a stock's price movement and trading volume, as opposed to focusing on a company's fundamentals and as
such, may not match with a report on a company's fundamentals.
Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information
discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned
that any forward-looking statements are not predictions and may be subject to change without notice. Our proprietary trading and investment businesses may
make investment decisions that are inconsistent with the recommendations expressed herein.
We and our affiliates, officers, directors, and employees world wide may: (a) from time to time, have long or short positions in, and buy or sell the securities
thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or
act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have
other potential conflict of interest with respect to any recommendation and related information and opinions.
The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or
companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views
expressed in this report. No part of this material may be duplicated in any form and/or redistributed without Ideas 1st Information Services prior written consent.
This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other
person. Persons into whose possession this document may come are required to observe these restrictions.
Contact Details
Ideas 1st Information Services Pvt. Ltd.

3rd Floor, 28 Rajabahadur Mansion,
E-mail: contactus@ideasfirst.in
Mumbai Samachar Marg, Fort,
Website: www.ideasfirst.in
Mumbai 400 001. India.
Tel: +91 22 61485717/20
Ideas1st Research is also available on Bloomberg <IFIS> GO

RealEstate Ideas1st PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

RealEstate Ideas1st PDF

Uploaded by

Copyright:

Available Formats

Real Estate Sector Report

August 13, 2010

2.1. Domestic consumption story

2.2.2. Exploding Middle Class

2.2.3. Changing trend towards nuclear families

2.3. Huge Surpluses

2.3.2. Parallel economy

2.4. Growing Income

2.4.2. Inclusive growth

2.6. Perennial investment destination

2.7. Low Mortgage to GDP ratio

3.1. Increase in Interest rates

3.2. Global crisis fears

3.3. Many IPOs scheduled for launch

4. The transient irrationality

4.1. Real Estate prices nearing 2008 peak prices:

4.2. Stronger balance sheets:

4.3. Business reviving smartly:

5.1. Perennial investment destination

5.2. Parallel economy

5.3. Low Mortgage to GDP ratio

5.4. Difficulty in getting clear title land

5.5. High utilization of land in India

6. The emerging trend

6.1. Growing interests amongst NRIs

6.2. Demand for premium housing

6.3. Macroeconomic policies

6.4. Improving connectivity & mass transport

6.5. Strong emergence of new categories for demand of land

7.1.1.1. Low Cost Housing

7.1.2. Commercial Space

Qualitative Coverage - Buy

Ackruti City Ltd

Sector: Real Estate

Risk Return Matrix

Avg Daily Vol. (1 year NSE)

ACL has a presence in the high margin slum rehabilitation

Presence in high margin slum rehabilitation projects:

Shareholding Pattern (as on June 30,2010)

Analyst: Vishal Chopda

Focus on western India: ACL has a strong focus on

Date: August 13, 2010

Ackruti City Ltd (ACL) is a real estate developer with

Leveraging through partnerships: ACL has formed JVs

Ackruti City Ltd

Concentration in Mumbai region: Currently, ACL is

Upcoming projects: ACL has total area under management

With a presence in the high margin slum rehabilitation

ACLs footprint in Mumbai City

Qualitative Coverage - Strong Buy

Anant Raj Industries Ltd

Sector: Real Estate

Risk Return Matrix

Avg Daily Vol. (1 year NSE)

AIL has negative net debt and will be launching projects of

Shareholding Pattern (as on June 30,2010)

Analyst: Vishal Chopda

Strong balance sheet: As on March 31, 2010 AIL had loans

Date: August 13, 2010

Upcoming projects with foray in premium residential

Anant Raj Industries Ltd.

Kirti Nagar, Delhi

Near Airport, NH-8