RealEstate Ideas1st

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

1. Current scenario͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯ

2. Demand͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϯ
3. Why the real estate stocks have been beaten down by the investors?͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϲ
4. The transient irrationality͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϳ
5. Why is the Indian real estate sector different from the rest of the world?͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϴ
6. The emerging trend͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϬ
7. Appendix͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭϭ
www.ideasfirst.in August, 2010 1

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 India’s real estate market was safe and didn’t face proportional impact. The sudden
disappearance of the liquidity and the fear in investor’s 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 haven’t 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
India’s 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.

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. It’s 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 India’s 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 world’s 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

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 Indian’s 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
government’s increased focus on infrastructure would further boost the growth at the

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 mortgage’s market grows.

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 it’s 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 India’s strong macroeconomic
fundamentals and its limited exposure to the international market we expect only a mild, if any,
impact on India’s growth.
3.3. Many IPO’s scheduled for launch
The IPO’s 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.

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 sector’s domestic nature it won’t 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.

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 country’s 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.

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 vendor’s production facilities and residential complexes.

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.

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

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.

Qualitative Coverage - Buy
Ackruti City Ltd Rating -
Sector: Real Estate CMP: C533.35 Nifty: 5452.10 Sensex: 8167.03 Date: August 13, 2010
Risk Return Matrix Overview

Ackruti City Ltd (ACL) is a real estate developer with
operations mainly in Mumbai. The company develops
Risk
residential properties, commercial properties and SEZs. The

company has also started to venture into Pune, Surat,
Baroda and Ahmedabad. However, Mumbai still constitutes
Return the majority of its ongoing projects. The company is also
developing many projects through public-private partnership
Stock Data (PPP) and joint ventures (JV).
Market Cap : C 38,795.9 mn ACL has a presence in the high margin slum rehabilitation
52 week range : C 590 / C 453 projects, has an understanding of the Western India market
Bloomberg : AKCL IN with good revenue visibility. We recommend a Buy on the
stock.
Reuters : ACKR.BO
Investment Rationale
BSE : 532799
Presence in high margin slum rehabilitation projects:
NSE : ACKRUTI
ACL is one of the major players in the lucrative slum
Avg Daily Vol. (1 year NSE) : 120,442
rehabilitation projects in Mumbai and was awarded the 1st
No. of Shares : 72.74 mn slum rehabilitation project by Maharashtra government in
1995. The company has completed approximately 4.7 mn sqf
Shareholding Pattern (as on June 30,2010) 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
DII Others
1.8% 10.7% 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
FII long-gestation period.
5.0%
Focus on western India: ACL has a strong focus on
Promoter
82.5%
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
Relative Performance 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
Source: Capitaline
original projects.
Financial Performance Leveraging through partnerships: ACL has formed JVs
(C Crs) with DLF, Hiranandani, Marathon and Everest to develop
FY10 FY09 FY08 FY07
various properties. The JVs help the company to bring the
required money for the project and also share the risk
Sales 579.63 397.08 439.76 189.48
associated with the project. The company is also into PPP
EBITDA 424.44 456.3 419.84 114.13 projects like development of government staff quarters and
Adj PAT 164.91 267.34 297.79 77.72 offices in Mumbai and developing bus terminals in Gujarat.
Out of the current project area of 27.5 mn sqf (excluding
EPS 23.54 39.43 44.44 11.32
townships & biotech parks), 20.9% of projects are PPP.
Analyst: Vishal Chopda vishal.chopda@ideasfirst.in

Ackruti City Ltd
Key Concerns Investment Rationale
Concentration in Mumbai region: Currently, ACL is Upcoming projects: ACL has total area under management
heavily dependent on the Mumbai region for its revenues. of 53.7 mn sqf with the company’s share being 27.5 mn sqf.
Fall in prices in the region due to oversupply, increase in Including the various townships and biotech parks the
construction costs or any adverse government policy company is developing the company’s share of area under
decision could impact the valuation of the company. management is 97.3 mn sqf.
However, the company has already started developing Recommendation
properties in other cities of the country to mitigate this
With a presence in the high margin slum rehabilitation
risk.
projects and a strong understanding of the market in which it
Project execution risks: Any delay in execution of operate, ACL is a good investment for long term. The
projects will significantly impact the valuation of the company scores a 3 (out of 5) on our star matrix and has
company. been assigned low risk-medium return rating.
Economic slowdown: A slowdown in the economy due We recommend a Buy on the stock.
to any internal or external reasons could impact the
demand and pricing of real estate.
ACL’s footprint in Mumbai City
Qualitative Coverage - Strong Buy
Anant Raj Industries Ltd Rating -
Sector: Real Estate &03C137.7 Nifty: 5452.10 Sensex: 18167.03 Date: August 13, 2010

Anant Raj Industries Ltd (AIL) is a real estate company pre-
dominantly based in the Delhi-NCR region. The company
Risk
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
Return residential properties. Earlier, the company only
manufactured ceramic tiles which currently constitute less
Stock Data than 5% of its total revenue.
Market Cap : C40,635.3 mn AIL has negative net debt and will be launching projects of
52 week range : C 164 / C 99 5.76 mn sqf in next two years including 0.52 mn sqf of super-
Bloomberg : ARCP IN premium residential projects in Delhi. We recommend a
Strong Buy on the stock.
Reuters : ANRA.BO
BSE : 515055
Huge land bank acquired at low cost: AIL has a land bank
NSE : ANANTRAJ
of 1000 acres (developable area of 70 million sqf) in the NCR
region. Around 95% of this land is located within 30 kms of
No. of Shares : 295.1 mn Delhi. The land has been acquired at low cost keeping in
mind the future development in those areas. The low land
Shareholding Pattern (as on June 30,2010) cost and the lease-based model enables the company to
enjoy high margins as compared to the other real estate
Others players.
DII 9.5%
0.7% 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
FII the company has a comfortable liquidity position and is not
28.5% Promoter forced to sell its assets at distressed valuations in case of a
61.4%
slowdown in the market.
Steady rental income: AIL had a rental income of INR
Relative Performance 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.
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.
Source: Capitaline
Financial Performance Strategic Alliances: AIL entered into a 50.1:49.9 JV
(C Crs)
agreement with Monsoon Capital for development of an IT
Park at Panchkula, Haryana resulting in cash infusion of
FY10 FY09 FY08 FY07
Rs.1,846 mn. Also, the company has a 50:50 JV with Swan
Sales 286.31 252.40 603.76 208.04 Consultants, Reliance ADAG Company, with total investment
Other income 53.78 67.91 29.71 4.34 of Rs.4,000 mn for two hospitality projects at NH-8 near
Airport and an IT park at Manesar, Haryana. AIL also sold
EBITDA 311.81 288.46 591.66 181.34
26% stake in its subsidiary, Anant Raj Projects, to TAIB Bank
Adj PAT 238.51 207.26 436.25 125.47 Bahrain for INR 2,160 mn. AIL’s share in the above
EPS 7.97 6.90 14.55 5.06 investments alone comes out around INR 12,000 mn.

Anant Raj Industries Ltd.
Projects completed during the year Investment Rationale
Constructed Strong understanding of the market: AIL has been regular

Project Location Area (mn sqf) in monetizing its assets and never became a part of the race
IT Park Manesar 1.80 to have PAN India presence by acquiring land at high cost.
The company sold land during the boom period of FY07-08
Shopping Mall Kirti Nagar, Delhi 0.75 and bought land at low prices during FY09-10.
Hotel Grand Near Airport, NH-8 0.06 Key Concerns
Hotel Papillion Near Airport, NH-8 0.04 Concentration in one geographical segment: All the
Commercial
projects of AIL are located in the NCR region exposing the
Complex Greater Noida 0.12 company to significant concentration risk. Fall in prices in the
region due to over supply, increase in construction costs or
Total 2.77
any adverse government policy decision could impact the
Projects in pipeline to be completed over 2-3 years valuation of the company.
Constructed Project execution risks: AIL is expected to complete the

Project Location Area (mn sqf) 5.76 mn sqf of projects in the next two years. Any delay in
execution of these projects will significantly impact the
IT-SEZ Rai, Sonepat, Haryana 2.10
valuation of the company.
IT Park Panchkula, Haryana 0.54
Economic slowdown: A slowdown in the economy due to
Housing Kapashera, Near any internal or external reasons could impact the demand
project Airport 0.29
and pricing of real estate.
Housing Recommendation
project Rai, Sonepat 1.00
With negative net debt and huge low cost land bank in the
Housing
NCR region, AIL is an attractive opportunity for the long term.
project Hauz Khas, Delhi 0.26
The company scores a 4 (out of 5) on our star matrix and
Housing has been assigned the low risk-high return rating.
project Manesar, Gurgaon 1.14
We recommend a Strong Buy on the stock.
Housing Bhagwandas Road,
project Delhi 0.26
Hotel Tricolor Near Airport, NH-8 0.10
Hotel Shimla Shimla 0.07
Total 5.76
Land Acquisition Strategy

Ansal Properties & Qualitative Coverage - Buy
Infrastructure Ltd Rating -

Ansal Properties & Infrastructure Ltd (APIL) is a Delhi based
real estate developed with presence in the NCR
Risk
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
Return realty sector. The company has developed and delivered
more than 193 mn sqf under various product categories and
Stock Data geographical locations.
Market Cap : C12,075.1 mn APIL has a strong track record, strong project pipeline and is
52 week range : C 97 / C 58 trading at a significant discount to its book value. We
Bloomberg : APIL IN recommend a Buy on the stock.
Reuters : ANSP.BO Investment Rationale

BSE : 500013 Inexpensive valuations: At CMP of C 91.7, APIL is trading
NSE : ANSALAPI at P/BV of 0.94x which is very low as compared to other real
Avg Daily Vol. (1 year NSE) : 1,087,584 estate players. Inexpensive valuations provide a margin of
No. of Shares : 123.1 mn safety leading to low risk.
Strong track record: APIL has track record of more than 40
Shareholding Pattern (as on June 30,2010) years and has delivered more than 193 mn sqf under various
product categories and geographical locations. The company
Others has delivered around 17.59 mn sqf of commercial &
30.4% residential properties, 98.37 mn sqf of integrated townships
and 72.57 mn sqf of farm development across various
Promoter locations. The company was the first to build one of the initial
55.4% multiplex, ‘PVR Saket’ in the Delhi region. The company has
DII
2.8% developed lot of quality properties in the central business
FII district of Delhi and Gurgaon.
11.5%
Geographical spread of operations: APIL is spread across
NCR region, UP, Rajasthan, Punjab and Haryana. Thus, the
Relative Performance 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
Financial Performance
(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
EPS 6.06 2.78 15.08 23.00

Ansal Properties & Infrastructure Ltd
Key Concerns Recommendation
Project execution risks: APIL is developing more than With inexpensive valuations, strong track record and strong
270 mn sqf over the next few years. Any delay in project pipeline , APIL is an attractive opportunity for the long
execution of these projects will significantly impact the term. The company scores a 3 (out of 5) on our star matrix
valuation of the company. and has been assigned the low risk-medium return rating.
Economic slowdown: A slowdown in the economy due We recommend a Buy on the stock.
to any internal or external reasons could impact the
demand and pricing of real estate.
Ongoing projects
Breakup of Gross Saleable Area of 270 mn sqf
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Brigade Enterprises Ltd Rating -

Brigade Enterprises Ltd (BEL) is a Bangalore based realty
player. The company which has been traditionally focused on
Risk
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
Return sqf of saleable area.
Stock Data BEL has a comfortable leverage position, strong project

pipeline and has recently forayed into the affordable housing
Market Cap : C 15,069.6 mn segment. We recommend a Buy on the stock.
52 week range : C 187 / C 82 Investment Rationale
Bloomberg : BRGD IN Foray into affordable housing: BEL has entered the
Reuters : BRIG.BO affordable housing segment though “Brigade Value Homes”.
BSE : 532929 The company will develop the same at Kanakapura Road,
Devanahalli Town, Mysore Road and K R Puram in
NSE : BRIGADE
Whitefield. The company plans to develop around 10,000
homes in this segment and will be in the price rand of Rs.1.0-
No. of Shares : 112.3 mn 2.6 mn/unit.
Comfortable leverage position: BEL has a comfortable
Shareholding Pattern (as on June 30,2010) leverage position with its gross debt to equity ratio at 0.75x
as at end of FY10 on a consolidated level.
Others
34.9% Expanding outside Bangalore: BEL has been traditionally
focused on the Bangalore and is now expanding to other
southern cities like Mysore, Hyderabad, KochiS and
Promoter
57.5% Chennai.
DII
2.8% Upcoming projects: BEL has 3 mn sqf of
FII
4.7% 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
Relative Performance is about 80% sold. The company plans to launch another 7-
10 mn sqf this year which will be sold over next 3 years.
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)
Source: Capitaline will soon be launching the second MLR Convention Centre in
Whitefield, Bangalore Sheraton - Mysore, Holiday Inn -
Financial Performance Chennai and Holiday Inn - near International Airport,
(C Crs) Bangalore.
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
Residential Projects Key Concerns
Concentration in one geographical segment: Currently,
Project Units Saleable Area (mn sqf)
BEL is heavily dependent on the Bangalore region for its
Metropolis 1618 2.52 revenues. Fall in prices in the region due to the slowdown in
Gateway 1255 2.21 IT sector, oversupply, increase in construction costs or any
adverse government policy decision could impact the
Courtyard 184 0.28
valuation of the company. However, the company has
Palm springs 154 0.28 already started developing properties in other southern cities
to mitigate this risk.
Sparkle 192 0.19
Petunia 49 0.18
Project execution risks: Any delay in execution projects will
significantly impact the valuation of the company.
Horizon 70 0.11
Solitaire 43 0.07 any internal or external reasons could impact the demand
Crescent 10 0.03 and pricing of real estate.
Citadel 7 0.02 Recommendation

With comfortable leverage position, strong project pipeline
Odyssey 4 0.01
and the recent foray into the affordable housing segment,
Homestead - 4 14 0.01 BEL is an attractive opportunity for the long term. The
company scores a 3 (out of 5) on our star matrix and has
Total 5.91
been assigned the low risk-medium return rating.
Commercial Projects We recommend a Buy on the stock.
Project 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 3.03
Qualitative Coverage – Buy
DB Realty Ltd Rating -
Sector: Real Estate CMP: C Nifty: 5452.10 Sensex: 18167.03 Date: August 13, 2010

DB Realty (DBRL), promoted by Vinod K Goenka and
Shahid U Balwa, is engaged in real estate development in
Risk
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
Return addition, the company is also involved in mass housing
projects as well as cluster redevelopment projects in
Stock Data Mumbai.
Market Cap : C109,151 mn Almost 85% of the land development done by DBRL is done
52 week range : C / C355 in Mumbai. Also, almost 36% of the ongoing projects are in
Bloomberg : DBRL.IN the residential space and only 8% of the total development is
in commercial space. In the forthcoming and upcoming
Reuters : DBRL.BO
projects, the development would skew more towards
BSE : 533160 residential space.
NSE : DBREALTY
DBRL has completed development over 14.4 million square
Avg Daily Vol. (quarterly NSE) : 105,667
foot(msf) in the past. Ongoing projects are developing 19.5
No. of Shares : 243,258,782 msf. The forthcoming and upcoming projects will develop
41.5 msf.
Shareholding Pattern From the development of mass housing projects for the
Mumbai local authority, DBRL generates transferable
Others development rights (TDRs), which are rights to develop
25.3%
additional built-up area in parts of Mumbai, generally north of
DII the relevant development, and can be utilized in its own
2.7%
projects or other developers’ projects in Mumbai. Currently,
the company’s ongoing project is expected to generate TDRs
FII Promoter of up to 10.94 million sq ft. Similarly, the forthcoming and
8.0% 64.0%
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
Relative Performance 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
DBRL has very little experience compared to its peers which
Area Sold(Sq. Sold Value C
Project ft) mn operate along the whole real estate supply chain. There are
many cases pending against DBRL and its subsidiaries.
Orchid Zone 164347 813 Most of the cases are related to land disputes.
Since real estate business is very sensitive to local
Orchid Woods 86845 936 regulatory scenario, DBRL is highly susceptible to any
adverse regulatory change pertaining to real estate in
Orchid heights 141321 2826 Maharashtra. Till date they have limited experience in
conducting business outside Mumbai and especially outside
Orchid suburbia 35268 334 Maharashtra. For redevelopment projects, there is high
degree of uncertainty related to title of lands and many
Orchid crown 75436 1802 upcoming and forthcoming projects still require regulatory
approvals.
Orchid Turf View 5000 200 Both the commercial projects among the ongoing projects
are to be funded through the IPO proceeds. These
Investment Rationale commercial projects are likely to be completed by end of CY
2012. Since the commercial projects involve upfront cash
Focused on Mumbai and Mumbai Suburbs: DBRL is
outgo towards land and construction, revenues are expected
focused on the Mumbai market which has shown the
only when the project is leased or sold out, which will happen
quickest revival after the 2008 slump and which
only at advanced stage of completion. With two long years
expected to show the highest demand for residential
for completion, there will not be any cash inflow from
housing in the coming 3 years. This ensures better sales
commercial realty segment.
and lesser inventory.
DB group has 112 subsidiaries and 3 partnership firms, with
Redevelopment schemes offer opportunity to develop
many related party transactions. The company, as of 30
projects on such land at a lower cost in prime locations.
September 2009, had given corporate guarantees for certain
The combination of better sales and low cost provides
debt facilities availed by its related entities, aggregating to
for better margins.
nearly C2518.89 crore. This is in excess of the net-worth of
Ongoing projects of the company are expected to the company at C1411.55 crore end September 2009. Out of
generate TDRs of up to 10.94 msf, providing enough the total corporate guarantees provided, C1769.26 crore (or
liquidity as the prices of TDR in the Mumbai market are 70% of guarantees) had been provided to entities engaged in
quoting at around C2500/ sq ft and are looking firm. businesses other than real estate such as hospitality and
telecom. DBRL has also made an investment of C705.15
DBRL has recently announced that it will spend C1000
crore in unlisted entities related to it. In addition, the
crore on acquisition of new projects. It plans to add
promoters have provided personal guarantees aggregating
44msf of new inventory to its portfolio. It also expects to
to approximately C4328.77 crore in connection with certain
generate 9 msf of TDR in next three years and 0.5 msf
debt facilities availed by such entities. DBRL has extended
through its hillview project.
interest-free loans to various entities related to the
promoters, amounting to more than C553.56 crore end
Recommendation September 2009. Further, it has not signed written
DBRL seems to have good future prospects because it agreements to document the terms and conditions of such
plans to increase its land bank through redevelopment loans. Moreover, some of these entities are either incurring
projects which is a cheaper way to acquire land. losses or have negative net-worth.
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.
We recommend a Buy on the stock.

DLF Ltd Rating -
Sector: Real Estate CMP: C 322.45 Nifty: 5452.10 Sensex: 18167.03 Date: August 13, 2010

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
Risk
developing residential, commercial and retail properties but

has also forayed into infrastructure, SEZ and hotel
businesses.
Return
Historically the company’s activities were mostly restricted to
Market Data North India primarily in the NCR. However to reduce
concentration in North India and de-risk its business model
Market Cap : C 547,343.0 mn the company acquired land across the country initially
52 week range : C 491 / C 252 through partial JVs/JDAs.
Bloomberg : DLFU IN DLF has a pan India presence across 31 cities and has ~238
Reuters : DLF.BO million square feet (msf) of completed development and 423
msf of planned projects. Currently the company has a land
BSE : 532868
bank of 413 msf and is executing 55 msf projects in various
NSE : DLF
regions across the country.
Avg Daily Vol. (1 year NSE) : 22,81,660
Post economic slowdown, the financial year 2009-10 has
No. of Shares : 1,697.4 mn
been a year of consolidation for the company. During this
period the company restructured its business model along
Shareholding Pattern two lines – 3 Development Companies (Dev Co) and Rental
Company (Rent Co). It also integrated CARAF/DAL with the
DII Others Rental business of the company to create a solid base of
0.5% 5.8%
FII stable cash flows in the form of rentals. As a strategic
15.1% initiative the company is also strongly considering
divestments of its non-core business to primarily focus on
core business operations.
Promoter
78.6% Investment Rationale
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
Relative Performance
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.
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
Source: Capitaline
advances were primarily used to repay debt. In between the
Financial Performance (C
C Cr) Wind Power business with an established market value of
C1,000 crore was retained. Over the next 15-18 months DLF
FY10 FY09 FY08 FY07 FY06
is targeting potential divestment proceeds in excess of C2,500
Sales 7,423 10,035 14,433 2,637 1,794 crore which includes Dwarka worth C800 crore, TIDCO worth
EBITDA 3,846 5,993 9,953 2,904 875 C900 crore and Others worth C1000 crore (of which a deal
worth C294 crore was achieve in June 2010 quarter). These
Adj PAT 1,720 4,409 7,800 937 404
proceeds will be mainly used for debt repayment.
EPS (C) 10.13 26.16 45.14 12.26 108.77
Analyst: Swapnil Suvarna swapnil.suvarna@ideasfirst.in

DLF Ltd
Upcoming Projects: Out of the 55 msf area under Debt situation: During the financial year 2009-10 the
construction, 21 msf is in Gurgaon, 5 msf is in Super Metros, company repaid ~ C5,600 crore against the mandatory
12 msf is in Rest of India and 16 msf is for Rent Co. The debt repayment of C3,549 crore. At the end of June 2010
company has commenced construction of ~5.4 msf uder quarter the company has already repaid C732 crore
home segments which includes 2 msf Capital Greens in against the mandatory debt repayment of C2,890 crore in
Delhi, 0.5 msf SIEL and 2.8 msf BTM Extn. Bengaluru. The the financial year 2010-11. Currently the company’s net
company expects to deliver ~30 msf through 2012-13. The debt stands at C18,463 crore with a 0.68 debt/equity ratio.
Mumbai NTC mills project launch is expected this financial The company has indicated that for financial year 2010-11
year after receiving all necessary approvals. the targeted ratio is expected to be between 0.4x-0.5x.
Pick up in Company Performance: In the financial year

2009-10 the company achieved sales of 12.5 msf against a Key Concerns
target sale of 14-15 msf. The company has now set a target Execution Risk: Any delay in the execution of these
(15-18 msf) of new bookings for the financial year 2010-11. projects or divestment plans either through rise in
The demand in residential segment remained buoyant as the operational cost or unexpected delays would significantly
company saw bookings of 3.6 msf and 1.44 msf in the March impact the cash flow hampering the debt de-leveraging
2010 and June 2010 quarter respectively. The company plan and the projections of 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 Economic slowdown: A slowdown in the economy due
Chennai/Kochi at an attractive price. Demand for to any internal or external reasons could impact the
Commercial Complexes continued to remain subdued demand and pricing of real estate.
however the company still witnessed as sale of 0.46 msf in Recommendation
June 2010 quarter. Under the annuity business the company DLFs huge low cost land bank and future potential in the
has targeted leasing of 3-4 msf in the current financial year development and annuity business makes them an
on back of no significant change in government policy attractive opportunity for long term. The company scores
actions or macro environments. Currently the company’s 4 (out of 5) on our star matrix and has been assigned low
lease portfolio comprises of 20 msf which provides an risk - medium return rating.
annualized rental of more than C1,400 crore. As on June
2010 quarter the rental income generated is ~ C300 crore. We recommend a Buy on the stock..
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.
Sales in FY2009-10
Region / Area Launched Area Sold Sales Value Avg. Realisation

Heads City ( msf ) ( msf ) ( Rs. Crs ) (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
Total 13.23 12.55 7150 5699
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 Qualitative Coverage - Strong Buy
Corporation Ltd Rating -

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
Risk
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
Return of residential projects in channel. In the next eight-nine years
the company plans to execute 56 msf of space.
Market Data
Every quarter GHCL is known to roll out one project and at
Market Cap : C 6587.1 mn present has four projects in line i.e. Satva, Suyojan, Maple
52 week range : C 205 / C 97 County and Maple County-2. At the end of March 2010
quarter, the company in these projects had 1.656 msf (worth
Bloomberg : GHFC IN
C356.42 crore) of total saleable area under construction, out
Reuters : GHFC.BO of which, 1.224 msf (worth C245.07 crore), has already been
BSE : 526367 booked by the customers.
NSE : GANESHHOUC
As a strategic move GHCL other then residence project is
Avg Daily Vol. (1 year NSE) : 54,668 also focusing on commercial offices, retail malls, SEZ (IT &
No. of Shares : 32.66 mn 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
Shareholding Pattern
GHCL has its core focus on construction. It is constructing
‘GLOMAX’ the commercial shopping mall in Ahmedabad.
DII Investment Rationale
FII 6% Others
19% 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,
Promoter which is expected to facilitate the growth of new high-end
56%
manufacturing industries. Recently a business survey has
placed the city as one of the top five destinations for
Relative Performance investment in the country. The New International Airport is
expected to bring a lot of positivity into city’s 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.
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.
Source: Capitaline
The company is planning commercial development with a
Financial Performance (C
C Cr)
saleable area of 6,75,000 square feet.
FY09 FY08 FY07 FY06 FY05 Strong Financials: In the financial year 2009-10 the
Sales 55.05 127.43 45.45 30.70 14.90 company posted net income of C100.57 crore and net profits
EBITDA 76.77 118.48 41.98 14.76 10.33
of C50.6 crore as compared to an income and profit of C89.5
crore and C49.4 crore respectively in the financial year 2008-
Adj PAT 16.79 106.06 16.57 14.47 10.54
09.
EPS (C) 14.85 31.71 9.76 11.76 26.05
Analyst: Swapnil Suvarna swapnil.suvarna@ideasfirst.in

Ganesh Housing Corporation Ltd
Investment Rationale Key Concerns
Strategic Alliances: An US based investment firm Single Location Focus: The Company’s entire land bank
Monsoon Capital has made an investment of `1,350 and projects are concentrated in Ahmedabad itself. Any
million in GHCL’s integrated township project named negative event within the city could impact the company and
‘Smile City’. its future plan significantly.
Upcoming Mega Projects: The Company’s biggest Economic slowdown: A slowdown in the economy due to
project till date is an integrated township project named any internal or external reasons could impact the demand
‘Smile City’ at Godhavi, which is only 4.5 km away from and pricing of real estate.
the Ahmedabad city limits. The entire township is spread Execution Risk: Though the management has increased its
over an area of 534 acres. This project has received an pace of development, any delay in the execution of these
FDI investment of `1,350 million through Monsoon projects either through rise in operational cost or unexpected
Capital and is expected to generate above `32,000 delays would significantly impact the cash flow and the
million over the period of seven-eight years. ‘Million projections of the company.
Minds’ an IT-ITES SEZ at SG Road in Ahmedabad is
Recommendation
spread over an area of 108 acres. In this project of
multiple use, 80 acres is notified for development of IT- We see GHCL as an attractive opportunity for the long
ITES SEZ and the remaining 28 acres is would be term. Thanks to it’s huge low cost land bank and future
divided for other developments like residential, potential of Ahmedabad city. The company scores a 4
commercial, retail, hospitality etc. The company may (out of 5) on our star matrix and has been assigned the
denotify the above project and change the use of entire best risk-reward rating.
108 acres as SG Road has a good potential for We recommend a Strong Buy on the stock.
residential, commercial and other developments. Godrej
Properties, which is batting heavily on Ahmedabad is
already developing township behind GHCL’s land, is a
positive to this project.
Projects Summary
Housing Development Qualitative Coverage - Strong Buy
& Infrastructure Ltd Rating -

Housing Development and Infrastructure Ltd. (HDIL),
promoted by the Wadhawan group, is one of the leading real
Risk
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
Return in slum rehabilitation projects and is currently executing the
largest SRA project under the expansion & modernization of
Stock Data Chhatrapati Shivaji International Airport (CSIA), Mumbai.
Market Cap : C101,523.0 mn HDIL has a strong expertise & is a market leader in SRA
52 week range : C 411 / C 202 projects and the company has a presence in the resilient
Bloomberg : HDIL IN Mumbai market with a strong revenue visibility. We
recommend a Strong Buy on the stock.
Reuters : HDIL.BO
BSE : 532873
NSE : HDIL
Strong expertise & market leader in SRA projects: HDIL
Avg Daily Vol. (1 year NSE) : 7,942,915
is a market leader in SRA projects which have strong entry
No. of Shares : 366.8 mn barriers. These projects require dealing with government
authorities and slum dwellers which need considerable
Shareholding Pattern (as on June 30,2010) experience. SRA projects are highly profitable as it does not
involve initial investment in land unlike conventional real
Others
estate projects. The company develops housing for the slum
28.6% dwellers free of cost and in return the company gets higher
FSI/TDR on land owned by it. However, SRA projects have
Promoter
42.3% a long-gestation period.
DII
1.0% Presence in the Mumbai region: Mumbai market is one of
FII the most stable real estate markets and was the first to
28.2% 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).
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.
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
Source: Capitaline completion basis instead of percentage of completion
Financial Performance method most of the revenue from the new launches will
come in FY12 and FY13. Further, the completion of phase I
(C Crs)
of airport project will provide the company with TDR
FY10 FY09 FY08 FY07 increasing the revenue visibility. The company has land
Sales 1,502.12 1,728.44 2,380.45 1,204.19 reserves (including TDR) of 221 mn sqf and currently has 63
mn sqf of projects under construction.
EBITDA 823.77 1,368.77 1,744.30 693.33
Adj PAT 566.57 86.41 1,400.04 541.90
EPS 17.35 28.55 64.96 30.44

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
construction costs or any adverse government policy
decision could impact the valuation of the company.
Residential Projects Project execution risks: HDIL has approximately 63 mn sqf
Saleable Area of projects under construction with 75% of it being the SRA
Project Sold (mn sqf) projects. Any delay in execution of these projects will
Premier, Kurla > 95% 1.00
Galaxy, Kurla (E) > 90% 0.48
any internal or external reasons could impact the demand
Metropolis. Andheri (W) > 95% 0.65 and pricing of real estate.
Majestic, Bhandup (W) > 40% 1.30 Recommendation
Residency Park, Virar (W) > 75% 1.25 With large land bank in the Mumbai market, strong revenue
visibility and being a market leader in the SRA projects, HDIL
Harmony, Goregaon (W) ~ 95% 0.04
is an attractive opportunity for the long term. The company
Meadows, Goregaon (W) ~ 75% 1.00 scores a 3 (out of 5) on our star matrix and has been
assigned the low risk-medium return rating.
Commercial Projects
Leased Saleable Area
Project / Sold (mn sqf)
HDIL Industrial Park, Virar (W) > 90% 1.50
Metropolis. Andheri (W) ~ 20% 1.02
Harmony, Goregaon (W) ~ 75% 0.07

Indiabulls Real Estate Ltd Rating -

Indiabulls Real Estate Ltd (IBREL) is a real estate company
engaged in development of commercial properties,
Risk
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
Return 58.6% of equity. Further, the company has a 52.3% effective
stake (45.3% equity + 7% through fees) in Indiabulls
Stock Data Properties Investment Trust (IPIT) which is listed in
Singapore. IPIT develops commercial and residential
Market Cap : C 78,020.5 mn
properties mainly in south central Mumbai. The company
52 week range : C 298 / C 142
recently bought around 11 acres of mill land in Worli for a
Bloomberg : IBREL IN total consideration of Rs.19,790 mn.
Reuters : INRL.BO
IBREL has assets in prime areas, huge land bank, a stake in
BSE : 532832 the growing power sector and is trading at a significant
NSE : IBREALEST discount to its book value. We recommend a Strong Buy on
Avg Daily Vol. (1 year NSE) : 3,910,328 the stock.
No. of Shares : 401.7 mn Investment Rationale
Assets in prime areas: IPIT has 3.3 mn sqf of leasable
Shareholding Pattern (as on June 30,2010) commercial area, 3.3 mn sqf of saleable residential area and
0.5 mn sqf of additional area in the prime locations (around
Others Lower Parel) of Mumbai. Even though IPIT forms a small
15.4% Promoter proportion of the total area to be developed by IBREL it
DII 22.1%
3.4% 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
FII
59.2% company bought Bharat mill land (8.37 acre) and Poddar mill
land (2.30 acre) for a consideration of Rs.15,040 mn and
Relative Performance Rs.4,740 mn respectively.
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
Source: Capitaline started. All the above land is fully paid for.
Financial Performance Share in the power business: IBREL holds a 58.6% stake
in IPL which was publicly listed in Oct 2009. At IPL’s current
(C Crs)
market cap, IBREL’s stake in IPL is worth C 31,691.3 mn. IPL
FY10 FY09 FY08 FY07 is well capitalized and project execution of 2665 MW is
Sales 129.36 208.61 140.65 13.92 already in progress. IPL plans to have a capacity of 6615
MW (coal-fired) in next 3-4 years.
EBITDA 62.70 174.30 622.03 31.15
Adj PAT -16.02 24.47 131.85 13.98
EPS NM 0.52 13.50 0.03

Indiabulls Real Estate Ltd
IPIT Assets (52.3% effective economics) Key Concerns
Area
Inexpensive valuations: At CMP, IBREL is trading at P/BV
Type Remarks Current price of 0.83x based on FY10 book value. The company has
(mn sqf)
already paid for the entire land it owns and its Mumbai land
Nearing Lease rate of INR 175-
Commercial 3.3 has been brought during 2005 where prices has increased
completion 225 /sqf/month
considerably compared to the acquisition cost.
Selling rate of INR
Residential 3.3 Work started Key Concerns
21,000 /sqf
To be Oversupply in South Central Mumbai: With most of the
Unspecified 0.5 NA
finalized real estate players, developing premium properties on the
Total 7.1 mill lands in South Central Mumbai region there is a fear of
oversupply in the area. This can slow down the absorption of
Non-IPIT Assets Under Development properties affecting the NAV of the company.
Area IBREL Expected Low promoter holding: Promoters of IBREL have only
Location
(mn sqf) ownership completion 22.1% stake (as on June 2010) in the company. As a result,
Residential the interests of promoters are not very clearly aligned with
Ahmedabad 1.8 100% FY 12-13 those of minority shareholders. Further, ROE delivered by
the company has been historically very low. However, over
Chennai 4.8 75% FY 12-13
the past two quarters the promoter stake has been
Gurgaon 6.8 51% FY 12-13 increasing gradually from 16.7% to 22.1% indicating the
Hyderabad 0.3 100% FY 11-12 confidence of promoters in the company.
Madurai 0.2 100% FY 12-13 Project execution risks: IBREL currently has 49.2 mn sqf
Indore 1.5 100% FY 13-14 (6.6 mn sqf of IPIT and 42.6 mn sqf of non-IPIT) of projects
Panvel 20.0 100% FY 13-14
under execution. Any delay in execution of these projects will
Commercial
Ahmedabad 0.3 100% FY 12-13
Baroda 0.7 100% FY 12-13
Gurgaon 3.7 51% FY 13-14 Recommendation
Indore 0.4 100% FY 12-13 With inexpensive valuations, huge land bank and a stake in
Thane 0.1 100% FY 11-12 the power business , IBREL is an attractive opportunity for
the long term. The company scores a 4 (out of 5) on our star
Panvel 2.2 100% FY 13-14
matrix and has been assigned the low risk-medium return
rating.
Jaypee Infratech Ltd. Rating -
Sector: Real Estate CMP: INR 84.05 Nifty: 5452.10 Sensex: 18167.03 Date: August 13, 2010

Jaypee Infratech Limited (JIL) is an Indian infrastructure
company engaged in the development of Yamuna
Risk
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
Stock Data Authority (YEA) to develop, operate and maintain the
Yamuna expressway. The concession also provides the
Market Cap : C116,740 mn right to develop 25 million square meters (approx 6175
52 week range : C 98.5 / C 76.2 acres) of land along the Yamuna expressway at five
Bloomberg : JPIN IN locations for residential, commercial, amusement,
industrial and institutional purposes.
Reuters : JYPE.BO
BSE : 533207 Jaypee Infratech’s model consists of earning revenues
from traffic and related facilities on the expressway during
NSE : JPINFRATEC
the 36-year concession period and development of
Avg Daily Vol. (monthly NSE) : 87153
associated real estate pursuant to the concession.
No. of Shares : 1,388,933,497
JIL will use the expertise of JAL and JVPL to implement
these projects. We recommend a Buy on the stock.
Others About Jaypee Group

Public issue 1%
16% 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

JAL marketing JIL’s real estate projects) has established itself
83% as a strong brand in the real estate micro-market of NCR.
The brand is supported by a marketing team of about 150
Relative Performance employees and a network of more than 200 brokers and
subbrokers.
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.
Other Jaypee group companies have been awarded a

Source: Capitaline
concession to develop a 1047 km long 8-lane access
Financial Performance controlled Ganga expressway between Greater Noida and
(CFUV) Ghazipur-ballia and approximately 30000 acres of land
FY10 FY09
along the Ganga Expressway, a 20.5 km long six lane
inner ring road in Agra wit h approximately 3160 acres of
Sales 640.66 554.54
land for development of land along the inner ring road and
EBITDA 603.54 317.57 is also constructing a motor racing track which is
APAT 487.49 266.73 expected to host a “Formula-1” race in 2011.
EPS 3.98 2.76

Jaypee Infratech Ltd.
Dependence on JAL: JAL and its affiliates will play a
Backing from strong promoter Group: Jaiprakash
substantial role in assisting JIL in the capacity of promoter,
associates Limited (JAL) is the parent company
board constituent and equity financier as well as in project
currently owns 83.2% of the shares of the company.
execution and marketing. As majority shareholder, JAL can
Jaiprakash Associates Limited(JAL) has a market
significantly influence the future policy decision of JIL. Since
capitalization of approximately $6.1 billion. Its is the
JIL depends on JAL for project execution and planning, JAL
largest private Hydropower group(700 MW operational).
will have high discretion in terms of charging for these
Yamuna expressway – significant progress made: services.
As of 31st March 2010, 81% of the land required for
Near term, high gearing: Currently, JIL has a Debt-to-equity
expressway and interchanges has been acquired from
ratio of 2.87 in view of the upfront capex requirement. This
YEA. There has been substantial progress in the
ratio may come down after FY12 once the capex for the
construction of the expressway, including completion of
expressway is over and the real estate business scales up.
100% of clearing and grubbing and 87% of earthwork.
JIL aims to complete the expressway in 2011, ahead of Land acquisition risk: JIL is vulnerable to any delay or
the date required by the concession, April 2013, which problem in relation to the acquisition of the remaining land by
includes a 3 year extension due to delays in land YEA. Currently, 2% of the land for expressway and 33% of
acquisition by YEA the land for real estate development is under dispute
Real estate land bank – largely paid for and low Demand tied to UP’s Outlook: Since the whole project is
cost: JIL has paid roughly 98% of its land cost. It has located in western UP, monetization of these projects will be
taken possession of 3745 acres of real estate influenced by the economic progress of this area. Local
development out of 6175 acres planned. JIL is required issues such as change in government and local law & order
to pay the land acquisition cost and an annual lease situation will also have some bearing.
rental of C 100 per hectare to the government of UP. Of
Risk of lower traffic volume on expressway: Various
the real estate land bank, 55% is situated within NCR
factors could affect traffic density, including the take-up of
and was acquired at an average rate of C 2.67 million
real estate development along the expressway, the ability to
per acre
cleave out traffic from existing roads like NH-2, increases in
Real estate development – integrated townships: fuel prices and changes in government policies with respect
The availability of mostly contiguous land parcels of to toll rates.
1235 acres gives JIL the flexibility to offer an “integrated Recommendation
township” product with considerable flexibility of land
Jaypee Infratech has backing of a strong brand of Jaypee
usage. The company will develop these parcels for
group. Yamuna expressway project remains a promising
mixed usage – residential, commercial, institutional and
project because of the large land bank and residential
recreational.
projects. The stock is a good buy in the medium to long
Large portion of Yamuna expressway funding in term. It has been awarded a low risk medium return
place: The company has entered into financing investment and a 4 star on our 5-star rating system.
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
Kolte Patil Developers Ltd Qualitative Coverage - Strong Buy
Rating -

Kolte Patil Developers Ltd (KPDL) is a Pune-based real
estate company having operations mainly in Pune &
Risk
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
Stock Data sqf of projects under execution and is currently trading at a
significant discount to its book value. We recommend a
Market Cap : C4,745.1 mn Strong Buy on the stock.
52 week range : C 76.0 / C 42 Investment Rationale
Bloomberg : KPDL IN Inexpensive valuations: KPDL has a book value of INR
Reuters : KOLT.BO 88.00 with land being valued at historical cost. Most of the
BSE : 532924 land is in Pune & Bangalore which are hot property market
due to the presence of IT industry. The company is currently
NSE : KOLTEPATIL
trading at a significant discount to its book value.
No. of Shares : 75.6 mn 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,
Shareholding Pattern (as on June 30,2010) 3 commercial cum residential use and 4 IT parks. Further,
the company currently has 5.5 mn sqf under execution.
DII Others
0.2% 22.0% Joint Ventures: KPDL has formed different JVs with ICICI
Ventures, Yatra Capital, Portman Holdings, Arora Int. to
FII
develop residential projects, commercial projects and
3.4%
integrated townships. The JVs help the company to bring the
required money for the project and also share the risk
associated with the project.
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
Relative Performance 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
construction costs or any adverse government policy
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
Financial Performance Economic slowdown: A slowdown in the economy due to
(C Crs) any internal or external reasons could impact the demand
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
EPS 3.76 9.08 17.32 14.81

Kolte Patil Developers Ltd
Ongoing projects
Project Location Details
High-end luxurious project launched in Oct 2009. Out of the 1.5

Glitterati by 24 K Aundh, Pune mn sqf proposed development, 0.5 mn sqf already launched
Affordable housing project launched in Dec 2009. 2 & 3 BHK

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

Integrated township Hinjewadi, Pune 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 Qualitative Coverage - Strong Buy
Developers Ltd Rating -

Mahindra Lifespace Developers Ltd (MLDL), formerly known
as Mahindra Gesco Developers Ltd, has two successful
Risk
synergistic core business areas under Mahindra Lifespaces

focusing on residential and commercial projects and
Mahindra World City (MWC) focusing on Integrated Business
Return Cities. The company has completed over 5.88 mn sqf of real
estate development. MLDL has forthcoming projects and
Stock Data land bank of around 20 mn sqf. Also it has 4,600 acres under
management through World Cities.
Market Cap : C20,437.5 mn
52 week range : C 550 / C 295 MLDL has a healthy balance sheet, presence in SEZ
Bloomberg : MLIFE IN development and has good revenue visibility. We
recommend a Strong Buy and award low risk-medium
Reuters : MGDL.BO
return rating to the company.
BSE : 532313
NSE : MAHLIFE
Strong Balance Sheet: MLDL has a debt-equity ratio of
Avg Daily Vol. (1 month NSE) : 74,611
0.43x which provides enough scope for further leveraging
No. of Shares : 40.8 mn which may be needed for current and proposed project
financing.
Shareholding Pattern (as on June 30,2010) Pioneer in developing SEZ in the private sector: MLDL
was the first to develop SEZs in the private sector. The
Others company has 6 sector specific SEZs currently notified and 4
15.0%
operational at the two World Cities. MWC Chennai was
DII India’s first integrated business city in PPP mode. It is spread
11.9% over 1550 acres and has 3 SEZs, a domestic tariff area and
Promoter
51.1% 325 acre integrated township area. MWC Jaipur is a 3000
acre integrated business city with a multi-product SEZ and a
FII domestic tariff area.
21.9%
Upcoming projects: MLDL (excluding MWC) has ongoing
Relative Performance 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
Financial Performance any internal or external reasons could impact the demand
(C Crs) and pricing of real estate.
FY10 FY09 FY08 FY07 Project execution risks: Any delay in execution projects will
Sales 417.87 341.78 231.08 216.35 significantly impact the valuation of the company.
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 Summary of Projects
Location Project DFP (mn sq.ft) Location Ongoing Forthcoming Land bank
Forthcoming projects Chennai 0.37 1.95 11.00
Ghatkopar Project 0.20 Mumbai 0.95 0.60 0.59

Mumbai Eminente Phase 3 0.15 Pune 0.33 - 2.10
GE Garden* (R&C) 0.25 NCR 0.66 0.93 -
Aura subsequent Nagpur - 1.33 -

NCR phases 0.93
Hyderabad - - 1.00
Aqualily subsequent
phases 1.15 Nasik - - 0.60
Chennai
Iris Court 0.80 Bangalore - - -
Nagpur MIHAN Project 1.33 Total 2.31 4.81 15.29
Total 4.81 Recommendation
Land bank With a healthy balance sheet, presence in SEZ development

and good revenue visibility, MLDL is a good investment for
Nasik Satpur 0.60 long term. The company scores a 4 (out of 5) on our star
Pimpri Project 0.30 matrix and has been assigned the low risk-medium return
rating.
Pune Pimpri Residential 1.80
Hyderabad* Kukatapally 1.00
Chennai MWC Chennai 11.00
Mumbai Thane 0.59
Total 15.29
*Joint development
Status of Ongoing Projects
Total Expected
Launch Last Selling Completion
Location Project Name date Price (/sqf) % sold Date
mn sqf units (area)
Splendour Phase 1 Q4 FY08 7,300 0.416 264 99% Jun-11

Mumbai 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

NCR
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

Pune
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

Chennai
Aqualily Apts Phase 1 Q1FY11 2,950 0.144 80 2% Sep-12
5000 (Wt.
Total, Avg Avg.) 2.309 1,375 71%
Nitesh Estates Ltd Rating -

Nitesh Estates Ltd (NEL) is in the business of real estate
development and is primarily engaged in the development of
Risk
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
Return Hyderabad. The company is developing its first hospitality
project, the first ‘Ritz-Carlton’ brand hotel in India, on
Stock Data Residency Road in the central business district of Bengaluru.
Since its incorporation in 2004, the company has developed
Market Cap : C 5928.0 mn
three residential projects totaling 0.55 mn sqf of Saleable
52 week range : C 55 / C 35
Area and Developable Area.
Bloomberg : NITEIN
NEL got listed on BSE and NSE on May 13, 2010. The
Reuters : NITE.BO
company has seen a fall in share price of more than 25%
BSE : 533202 from its IPO price of C 54. We believe the company can
NSE : NITESHEST provide good returns from these levels. We recommend a
Avg Daily Vol. (1 month NSE) : 268,519 Buy at these levels and award low risk-medium return rating
No. of Shares : 145.8 mn to the company.
Shareholding Pattern (as on June 30,2010) Asset light model: NEL undertakes most of its projects
through the joint-development model as compared to
Others acquiring a freehold or leasehold interest in the land. This
9.4% Promoter model reduces the upfront land acquisition and total project
DII 40.9%
24.2% 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
FII
25.6% to undertake further expansion of our operations.
Upcoming projects: NEL has 7 ongoing projects of 2.09 mn
sqf and 4 forthcoming projects of 1.55 mn sqf making a total
Relative Performance of 3.64 mn sqf. Further, the company has land bank of
132.62 acres (including partner’s 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.
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
Source: Capitaline
SBI MF as anchor investors. As per the shareholding of June
Financial Performance 30, 2010 other large institutional investors in the company
include Och-Ziff Captial Management, LIC and Blackrock
(C Crs)
India.
FY09 FY08 FY07 FY06
Sales 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

Nitesh Estates Ltd
Summary of Projects Key Concerns
No. of Area Saleable Area Suspension of ongoing projects: The construction activity
Type Projects (acres) (mn sqf) in respect of two of NEL’s ongoing projects, Wimbledon
Gardens (Residential) and Wimbledon Gardens
Ongoing Projects
(Commercial), has been suspended as the company is
Residential 5 21.91 1.69 currently in the process of redesigning the development
Hospitality 1 2.58 0.10 plans. If the company is not able to recommence such
construction, then its business, results of operations, cash
Office 1 2.65 0.30
flows and financial condition may be adversely affected.
Sub-Total 27.14 2.09
Concentration in one geographical segment: Majority of
NEL’s projects are located around Bengaluru. Fall in prices
in the region due to due to the slowdown in IT sector,
Forthcoming projects
oversupply, increase in construction costs or any adverse
Residential 3 51.57 0.97 government policy decision could impact the valuation of the
Shopping Mall 1 5.06 0.97 company. However, the company has already started
developing properties in other cities of the country.
Sub-Total 56.63 1.55
Limited execution history: NEL has executed only 3
residential projects totaling 0.55 mn sqf which were of
Land Parcels Available for premium segment. The company now wants to enter the
Future Development 132.62 - middle-income housing segment and has no prior developing
& marketing experience of the same.
Total 216.39 3.64 Economic slowdown: A slowdown in the economy due to

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
matrix and has been assigned the low risk-medium return
rating.
Orbit Corporation Ltd. Qualitative Coverage – Buy
Rating -

Orbit Corporation Limited(OCL) is a real estate
construction and development company with primary
Risk
focus on redevelopment of existing properties. OCL

endeavours to specialize in developing, designing and
managing “Build to suit” high-end residential and
Return
commercial properties.
Its directors have over 18 years of experience in the real

Stock Data
estate sector and have been involved in redevelopment
Market Cap : C14,509.2 mn in their personal capacities till FY 2000. OCL was
52 week range : C178 / C83 incorporated in 2000.
Bloomberg : ORB.IN It is totally focused towards Mumbai and is currently

Reuters : ORCP.BO developing 4.8 msf. It has plots in andheri, santacruz,
napeansea road, lower parel and also a plot in Mandwa.
BSE : 532837
The total NAV of its projects is C 2103.8 crore
NSE : ORBITCORP
Avg Daily Vol. (1 year NSE) : 496148 OCL is a ISO 9001:2000 certified company. The
subsidiaries of OCL are orbit construction and realtors
No. of Shares : 54,980,945
private limited, orbit buildcon and realty private limited
and orbit housing private limited.
Geographic distribution of Land Bank
Others
35.2%
Promoter
DII 43.5%
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.
High Gearing: The debt-to-equity ratio remained around 1x
Focus on attractive Mumbai Land Bank: OCL is
for the last few quarters. However, they may require to
primarily focussed on redevelopment of dilapidated
increase their debt levels further to generate the cash for their
buildings in Mumbai which has support of the Mumbai
land purchases. Currently, the outstanding stands at C 889
government. Further, OCL has been able to get an
crore.
attractive land bank(4.8msf) despite the land scarcity in
Mumbai. Redevelopment is considered a high Success of Mandwa project: The Mandwa project forms
profitability margins business because of low cost of 50% of the land base of OCL. Thus the success of this project
acquisition. Also OCL has been able to get very will form a key to the future prospects of the company.
attractive plots in Mumbai e.g. Napeansea Road
Problems in the redevelopment business: OCL’s business
Very high realization from certain key projects: requires getting consent from at least 70% of the tenants,
Because of its projects being at prime locations, OCL is consensus between various groups of tenants, providing
able gets very high realizations in the range of C40000 accommodation to the tenants during the interim period of
per square foot. In most of its current projects, it would demolition and construction, and rehabilitation of the
be able to generate more than C10000 per square foot. occupants. Delay in any of the aforesaid activities could have
adverse implications on the company.
Project wise Breakup Recommendation
Location Saleable area(msf) Orbit Corporation Limited has good future prospects
because of its attractive land and high realizations per
Villa Orb 0.1 square foot from its projects. It is a good buy from a
Orbit Arya 0.1 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
Orbit Haven 0.0 our 5-star rating.
Orbit Residential 0.3 We recommend a Buy on the stock.
Orbit Terraces 0.3
Orbit Grand 0.1
Mandwa 2.4
NS Roadblock 0.3
Orbit Sky Chateau -
Villa Orb Annex 0.1
Orbit Grandeur-Santacruz 0.3
Lalbaug 0.9
Total residential 4.8

Peninsula Land Ltd Rating -

Peninsula Land Ltd (PLL) is a real estate developer with
presence in Mumbai, Pune, Goa, Nashik and Hyderabad.
Risk
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
Return properties and ‘Crossroads’ for retails properties. The
company developed the first world-class mall in India and
Stock Data was also the first to commercially develop a textile mill in
Mumbai.
Market Cap : C19,250.8 mn
52 week range : C 101 / C 62 PLL has a strong balance sheet and good revenue visibility
Bloomberg : PENL IN with upcoming projects in the Mumbai market. We
recommend a Buy at these levels and award low risk-
Reuters : PENL.BO
medium return rating to the company.
BSE : 503031
NSE : PENINLAND
Strong financials: PLL’s revenues have grown by a CAGR
of 31% during past three years. During FY09, the revenues
No. of Shares : 279.2 mn of the company showed a healthy increase when most other
players reported decline in revenues due to falling prices.
Shareholding Pattern (as on June 30,2010) ROE and ROCE of the company also have been very
healthy with both being above 25% for FY10.
Others
21.3%
Strong balance sheet: As on March 31, 2010 PLL had
loans of around INR 4,671 mn compared to cash & bank
DII balance of around INR 6,502 mn implying a negative net
4.9% Promoter debt. The debt to equity ratio of the company stood at 0.37x
53.7%
which provides enough scope for further leveraging if needed
FII for current and proposed project financing.
20.2%
Upcoming projects: PLL has around 500 acres of land
Relative Performance 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.
Timely execution and brand name: PLL has emerged as a
successful developer mainly due to its timely execution
Source: Capitaline
abilities. Further, the company has been able to develop
establish brands in all categories which has not been
Financial Performance possible with most real estate players. The company is
(C Crs) known for being the first to develop a world-class mall in
FY10 FY09 FY08 FY07
India and commercially develop a textile mill in Mumbai.
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
EPS 8.68 5.11 4.59 40.25

Peninsula Land Ltd
Concentration in one geographical segment: Currently,
Project Type Area
PLL is heavily dependent on the Mumbai region for its
Projects under execution revenues. Fall in prices in the region due to oversupply,
Peninsula Business increase in construction costs or any adverse government
Park Commercial 1.2 mn sqf policy decision could impact the valuation of the company.
However, the company has already started developing
Peninsula Technopark Commercial 0.9 mn sqf
properties in other cities of the country.
Projects in pipeline
Project execution risks: PLL is expected to complete the
Group housing & 28 mn sqf of projects in the next 3 to 5 years. Despite its
Nasik project residential 18 acres
proven timely execution skills, any delay in execution of
Premium these projects will significantly impact the valuation of the
Betim, Goa project residential 0.5 mn sqf company.

Recommendation
With a strong balance sheet, brand name and good revenue
visibility, PLL is a good investment for long term. The
company scores a 4 (out of 5) on our star matrix and has
been assigned the low risk-medium return rating.

Puravankara Projects Ltd. Qualitative Coverage - Buy
Rating -

Puravankara Projects Ltd (PPL) is a Bangalore based real
estate developer is one of largest players in Southern India.
Risk
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
Return projects through its 100% subsidiary, Provident Housing Ltd
(PHL) under the Provident brand and develops premium
Stock Data segment projects under Purva brand.
Market Cap : C 25,393.4 mn PPL has a healthy balance sheet, made a successful entry
52 week range : C 137 / C 76 into affordable housing and has good revenue visibility with
Bloomberg : PVPK IN upcoming projects in the premium and affordable housing
segment. We recommend a Buy at these levels and award
Reuters : PPRO.BO
low risk-medium return rating to the company.
BSE : 532891
NSE : PURVA
Successful entry into affordable housing: PHL launched
two affordable housing projects totaling 2.5 mn sqf in
No. of Shares : 213.4 mn Bangalore and Chennai. Around 75% of the area has been
sold while 30% of construction is complete. The company
Shareholding Pattern (as on June 30,2010) plans to launch another 6 mn sqf under the Provident brand
in FY11.
DII Upcoming projects and extensive land bank: PPL has

Promoter 1.5% total of 143.25 mn sqf of developable area and 118 mn sqf of
90.0%
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
FII
6.2% spread across geographies of Bangalore, Chennai, Kochi
Others
2.3% 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
Relative Performance 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.
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
Source: Capitaline MoU with Homex of Mexico to undertake projects in
Financial Performance affordable housing segment. The JV for the same is
expected to be signed soon and two projects would be
(C Crs)
launched.
FY10 FY09 FY08 FY07
Diversifying outside Bangalore: PPL has been traditionally
Sales 478.36 444.91 565.81 416.86
focused on the Bangalore and is now expanding to other
EBITDA 308.53 266.46 333.99 191.26 southern cities like Kolkata, Mysore, Kochi and Chennai.
Adj PAT 145.32 144.42 240.05 129.1 Further it has also expanded into overseas markets like
Colombo and UAE.
EPS 6.64 6.77 10.91 6.56

Puravankara Projects Ltd
Saleable Concentration in one geographical segment: A large part

Area of PPL’s NAV comes from the Bangalore region. Fall in
Project Location (mn sqf) prices in the region due to oversupply, slowdown in the IT
Residential industry, increase in construction costs or any adverse
government policy decision could impact the valuation of the
Atria-I (62%) Sanjay Nagar, Bangalore 0.15
company. However, the company has already started
Elita developing properties in other southern cities to mitigate this
Promenade risk.
(49%) JP Nagar, Bangalore 1.25
Project execution risks: Any delay in execution projects will
Venezia Yelhanka, Bangalore 2.09
Highlands Mallasandra, Bangalore 1.36
Grand Bay Marine Drive, Kochi 0.50 any internal or external reasons could impact the demand
Eternity Kakkanad, Kochi 0.80 and pricing of real estate.
Recommendation
Swan Lake OMR, Chennai 0.83
With a healthy balance sheet, successful entry into
Moon Reach Airport-Seaport Rd, Kochi 0.15
affordable housing and good revenue visibility, PPL is a good
Oceana Marine Drive, Kochi 0.26 investment for long term. The company scores a 3 (out of 5)
on our star matrix and has been assigned the low risk-
Atria Platina
(62%) Sanjay Nagar, Bangalore 0.09 medium return rating.
Elita Garden We recommend a Buy on the stock.

Vista (36%) Rajarhat, Kolkata 0.44
Purva
Skywood Sarjapur Road, Bangalore 0.69
Cosmo City Pudupakkam, Chennai 1.50
Doddaballapur Rd,
Wellworth City Bangalore 1.15
Sub-total 11.27
Commercial
Moneto Chennai 0.36
Primus (60%) Chennai 0.10
Sub-total 0.46
Total 11.73
Sobha Developers Ltd Qualitative Coverage – Buy
Rating -

Sobha Devlopers Limited(SDL) is the largest real estate
player in southern part of India , in terms of revenues,
Risk
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.
Return Subsequently, in 2009 it raised C5.27 billion through a QIP.
Stock Data As of March 2010, SDL has a land bank of 119msf(million

square foot) spread across 10 cities. The developable
Market Cap : C36,326.3 mn potential area available on the entire land bank including
52 week range : C/ C 197 the FSI is 244msf. The total cost of the land bank is about
Bloomberg : SOBHA.IN C2362 crore, which leads to the average cost of land to
C187 per square feet and land cost of saleable FSI cost is
Reuters : SOBH.BO
C98 per square foot.
BSE : 532784
Since its inception the company has developed 36.34 msf
NSE : SOBHA
of land. In the past 5 years the company has developed
Avg Daily Vol. (1 year NSE) : 120292
30.4 msf. Of the total ongoing projects SDL is currently
No. of Shares : 98,063,868 developing residential projects of 8.5 msf, 4.24 msf of
contractual projects and about 0.58 msf of commercial
Shareholding Pattern projects totalling to 13.32 msf of ongoing projects. The
company is expected to launch over 7.22 msf in FY11.
DII Others The company’s residential projects include luxury, super-

9.7% 5.4%
luxury and middle-income apartments, villas, row-houses
and plots. The company also undertakes contractual
projects for clients( Infosys accounts for 85% of their
FII
24.3% Promoter business).
60.6%
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
Relative Performance 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
EPSC 13.51 14.88 30.21 21.15

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).
Healthy cash flows to Reduce debt: SDL has 7.78 msf of
ongoing projects (of which 4.39 msf has been sold) which
Key Concerns are expected to generate net cash flows of C11.9 billion.
Furthermore, it plans to launch 5.9 msf of new projects in
Focused towards South India: SDL is focused towards
the next year which will contribute to another C10.7 billion.
South India which makes susceptible to any local
SDL plans to reduce its D/E ratio to 0.5x from its current
regulatory changes. Any adverse regulatory changes
0.82x in march 2010.
may affect it negatively. SDL is looking for new projects in
other parts of the country but this is still a small portion of Strong presence in contract-based construction: SDL is
its project portfolio. the preferred contractor for Infosys and has constructed 22
msf in the contractual business which accounts for 15-20%
High gearing: The debt repayment of C399.5 crore has
of the company’s consolidated annual revenues. SDL
helped the company to reduce the debt from C1,932.2
currently has a construction book of C.5 billion (4.24 msf).
crore in FY09 to C1,474 crore in FY10. The total debt-to-
equity ratio reduced from 1.87 to 0.82 in FY09 and FY10 Low cost Land Bank: SDL has a total land bank of 119
respectively. The company expects to be debt free by msf and the developable potential including FSI is 244 msf.
FY13, as it is expected to repay about C450 crores every The total cost of land bank is C2362 crore. This leads to an
year till FY13. However, in spite of healthy cash flows, average cost of land to C187 per sqaure foot and the
SDL may be required to sell off some of its land to reduce saleable FSI cost is C98 per square foot. On company’s
its debt in that time frame. average realization of C4000 per square foot, it enjoys a
margin of C1800 per square foot after considering average
Catering to premium segment: SDL is focused on
construction cost of C2000 per square foot and land cost of
projects which cater to the premium segment. The city of
C187 per square foot.
Bangalore with its affluent IT workforce provides a good
customer base. However, once SDL moves to other cities Backward integration : The integrated model helps the
it may have to focus towards affordable housing and company to have in-house expertise at every stage from
houses which are in C20-30 lakh range in contrast to C40- conceptualization to completion of the project. This ability is
50 lakh range(assuming a flat of 1100 square foot and a a competitive advantage enabling the company to offer
realization of C4000 per square foot). complete end-to-end solutions to its clients and also
Recommendation augment its revenues. The integrated business model
provides three main advantages (1) Higher margins as
SOBHA Developers has good execution track record and
compared to peers (2) Better quality products (3) Timely
strong presence in the affluent Bangalore market. It also
gets support from its contract based contraction business. It execution of the projects.
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.
Unitech Ltd. Qualitative Coverage - Strong Buy
Rating -
Sector: Real Estate CMP: C88.10 Nifty: 5452.10 Sensex: 18167.03 Date: August 13,2010

Unitech Limited is a company which was started by four
civil engineers in 1971. The company has grown today
Risk
into a real estate giant with diverse interests in areas such

as property management & consultancy services,
construction & transmission towers and telecom.
Return UNITECH had its IPO in the Indian market in 1986.
Stock Data Real estate accounts for 83.6% of the company’s total
business. Within real estate, the company has presence
Market Cap : C221,823 mn in all segments – residential, retail, entertainment,
52 week range : C118 / C65 hospitality, commercial and SEZ. It has one of the most
Bloomberg : UT IN geographically diversified land banks among the real
estate developers in India. As of 31 March 2009, these
Reuters : UNTE.BO
land reserves amounted to 11,178.52 acres. Of these,
BSE : 507878 approximately 6,406.18 acres of land have been allotted
NSE : UNITECH or agreed to be allotted to the Group by State
Avg Daily Vol. (1 year NSE) : 8,279,150 Governments and their agencies, and approximately
No. of Shares : 2,517,857,828 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
Shareholding Pattern acres. Unitech showed 20 times growth in value of work
undertaken between FY2003 and FY2008.
Others
17.5% Unitech had a rough patch during the 2008-09 financial
DII crisis because of its high debt. It has been able to bale
3.3% Promoters
FII 46.7% itself out of the situation by selling off some of its assets
32.6% 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)
Unitech’s Land Bank 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
FY09 FY08 FY07 FY06
Sales(Cr) 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
EPS 4,53 6.31 12.03 53.93

Unitech Ltd.
High Debt: As of March 2009, the company has a total
Strong experience in Real estate: Unitech has
debt of C9055 crore as compared to C10,900 crore on
completed real estate development of over 24 million
March 2008. this corresponds to a D/E ratio of 3.16
square foot. It has developed 6 townships of 1400 acres
compared to a D/E ratio of 3.55 a year earlier.
as of January 2010. It claims to have made sales of
around 16.6 million square foot. It has presence in It was however successful in raising C1621 crore through
residential space, commercial space, entertainment QIP route and was also able to restructure its debt.
space, hospitality, SEZs and property management. Although this provided some relief, the debt still remains
high. This may have negative effects in the future.
Diversified land bank : Unitech is one company which
has land bank spread across the country. The current Slum rehabilitation in Mumbai Market: Although
land holding stands at around 7500 acres. The presence Unitech has taken up the ambitious project of acquiring
of this diversified land bank will allow it to prioritize its land through slum rehabilitation, the success of this
development activities based on the economic and project still remains to be seen. So far, consent has been
regulatory conditions obtained from over 30% of the slum dwellers.
Diversified business: Since real estate is a cyclical Managing pan-India projects: Although having a pan-
business, Unitech’s diversified businesses will provide it India land bank has advantages, it involves more
some protection in downturns. Unitech’s property coordination.
management arm, Unitech Property Management Private Relative Performance
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

Source: Capitaline
telecom licenses viz. unified access service license
(“UASL”) in all 22 telecom circles. In 2009, they received Recommendation
a spectrum of 4.4 MHz in 21 telecom circles. The Unitech is a established player in the Indian real estate
company had 4.2 million subscribers as of March 2010. market and one of the few that has a pan-India presence.
Unitech has partnered with Telenor and operationally Besides real estate development it also draws revenues from
exited, Unitech Wireless. Telenor has invested C61.4 other businesses such as property management, and
manufacturing of power transmission and telecom towers.
billion for a 67.25% stake.
Recently, it also diversified into telecom.
Strong execution capabilities and Brand Value: The It has a strong brand value and execution capabilities. It has
company has developed strong execution capabilities a large land bank for development of its future projects.
over the years in providing cost effective construction and
The stock is a good buy in the medium to long term. It has
development solutions. The company has expertise
been awarded a low risk medium return and a 4 star on
across real estate housing projects, including townships,
our 5-star rating system.
corporate offices , residential complexes and industrial
projects. Unitech’s property management subsidiary, We recommend a Strong Buy on the stock.
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.
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
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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,
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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
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make investment decisions that are inconsistent with the recommendations expressed herein.
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Real Estate Sector Report

August 13, 2010

1. Current scenario͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘Ϯ

www.ideasfirst.in August, 2010 1

www.ideasfirst.in August, 2010 2

2.1. Domestic consumption story

2.2.1. Working age population

2.2.2. Exploding Middle Class

www.ideasfirst.in August, 2010 3

2.2.3. Changing trend towards nuclear families

2.3. Huge Surpluses

2.3.1. High savings

2.3.2. Parallel economy

2.4. Growing Income

2.4.1. Increasing Employment

2.4.2. Inclusive growth

www.ideasfirst.in August, 2010 4

2.6. Perennial investment destination

2.7. Low Mortgage to GDP ratio

www.ideasfirst.in August, 2010 5

3.1. Increase in Interest rates

3.2. Global crisis fears

3.3. Many IPO’s scheduled for launch

www.ideasfirst.in August, 2010 6

4. The transient irrationality

4.1. Real Estate prices nearing 2008 peak prices:

4.2. Stronger balance sheets:

4.3. Business reviving smartly:

www.ideasfirst.in August, 2010 7

5.1. Perennial investment destination

5.2. Parallel economy

5.3. Low Mortgage to GDP ratio

5.4. Difficulty in getting clear title land

www.ideasfirst.in August, 2010 8

5.5. High utilization of land in India

www.ideasfirst.in August, 2010 9

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

www.ideasfirst.in August, 2010 10

7.1.1.1. Low Cost Housing

7.1.2. Commercial Space

www.ideasfirst.in August, 2010 11

www.ideasfirst.in August, 2010 12

Risk Return Matrix Overview

residential properties, commercial properties and SEZs. The

Analyst: Vishal Chopda vishal.chopda@ideasfirst.in

Risk Return Matrix Overview

develops residential buildings, commercial properties, SEZs,

Upcoming projects with foray in premium residential

Analyst: Vishal Chopda vishal.chopda@ideasfirst.in

Constructed Strong understanding of the market: AIL has been regular

Constructed Project execution risks: AIL is expected to complete the

Hotel Tricolor Near Airport, NH-8 0.10

Hotel Shimla Shimla 0.07