HDIL's 3Q PAT stood at `2.5bn, 19% higher than previous quarter's. Margin dipped qoq on higher construction costs. HDIL invested `12.98bn in four mega-projects along with a few small suburban projects in 3Q. We maintain Buy, with Mar '12e price target of `228.
n Strong 3Q. Cumulative sales value stands at ~`58bn. HDIL sold ~1.2m sqft of TDR at `3,100/sqft and 1.7m sqft of FSI in Vasai-Virar. In the next 6-9 months, it will receive ~`10bn from land (Popular Car Bazaar) and FSI (Goregaon) completed sales. PAT margin dipped 510bps qoq, due to high construction costs.
n Conference call highlights. HDIL acquired four mega and a few smaller projects in the quarter, at `12.98bn. In the next 12-15 months, it plans launching ph-2 of the Mulund, Goregaon and Kurla projects. Construction has already commenced at the IT-SEZ in Kochi and the Pune project. From next fiscal, HDIL will change its accounting policy to percentage-completion method.
n MIAL. Shifting of families in ph-1 of the MIAL project will be further delayed due to possible policy changes regarding eligibility for slum dwellers. 7,000 units are near completion for ph-1 rehab of MIAL (Kurla); while work on 20,000 units is ongoing, 12,000 families eligible for rehab have been identified. HDIL will acquire rights over 65 acres, once rehab for 27,000 families is complete.
n Valuation. We maintain our Mar '12e NAV at `255 and target price at `228. Our target price is at 10% discount to the NAV. At current market price, the stock trades at 0.6x Mar '12e P/BV.
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
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